The Internet's ability to accelerate price correction

Absolutely.

Part of what kept the intertia in past years is brokers controlling all the info. Add in their tendencies to well, lie, you had a pretty powerful ally for booms.

Now, in this day and age, places like streeteasy show the BS for what it is, and articles on the bust make it all the way around town in minutes. For that segment of people, I think the impact is already there. However, those people probably already knew.

That being said, I still know a good amount of folks "out of the loop" who don't really get on boards and such. I think they're slowly being converted, but thats going to take a little more time. And I'm talking about folks in their late 20s and early 30s. When you talk about my parents, they definitely don't hear about this stuff until it hits the Post.

So, I think the tide has turned, but we still have a bit more to go before we kill all the brokers. But, RE markets are determined at the margins, so I think the "enlightened" are going to have some impact here.

curious to what you mean by "RE markets are determined at the margins"

Given that RE is an illiquid market, and only a small percentage of overall apartments sell each year, a couple of sales can have a dramatic impact. Compare this to stocks, where the same exact shares trade over and over again, giving pretty clear price points.

So, cut to reality, you only need a few panic sellers to move a RE market. The majority of the market doesn't matter, because they're still sitting in their apartments and not really doing anything.

I agree with NYC10022 that prices are determined at the margins - I think what he means is that there are always normal buyers and sellers in any market.

These are people who say "I have a kid, it's time to buy an apartment" and other who say "I have a kid, time to move the suburbs" and who buy/sell just because of life events. These people always exist, whether the market is up or down.

The others are people who come in and out of the market based upon other factors, namely, a perception that prices are going up or down or cultural trends. Over the last few years, people have paid more to buy a place than they would to rent an equivalent place because they think they'll get priced out or because it became "cool" to buy (I think this is a major factor actually ... many of the young single people I work with in their early 20s fall into this category, which mystified me, because transaction costs dictate you need significant appreciation to make your $$$ back if you hold for less than 5 years ... but this fell on deaf ears). Now, you are seeing more people say "I think prices are going down" because of a weaker economy, unfavorable price to rent rations, and a true understanding of how the numbers work in real estate.

Real estate is a supply/demand game so fluctuations in the second category of people drive the market.

Right on. Core buyers will buy because they have to, but that doesn't mean they can stop the decline...

"the last real estate bust occured prior to Al Gore's invention of the Internet"

http://www.snopes.com/quotes/internet.asp

Sorry, just so tired of political lies that become "common knowledge."

PB: I think the answer is somewhere in the middle. The regular (and even occasional users) of Streeteasy and similar RE sites make up a very small percentage of the population. It's kind of like when you are pregnant: all you *think* you see are other pregnant ladies everywhere. As much as Streeteasy users see the writing on the wall, those who are not RE obsessed or actively in the market (or even casually dancing around it) won't really get the severity of the coming RE downturn until it makes it into one of the quarterly round-up articles in the NYTs, Post, etc. I recently thought back over the past few years when I was very happy with my current living situation and had no intention of moving: I rarely thought about price values or looked at comps to see what I could sell my apt. for or at what price I would pay to buy something else. The masses will only receive the word once the mainstream (paper and tv) media begin to drill away at this story.

Yes, he said he didn't invent the internet, he said he CREATED the internet.

That certainly doubled my opinion of him.

"As much as Streeteasy users see the writing on the wall, those who are not RE obsessed or actively in the market (or even casually dancing around it) won't really get the severity of the coming RE downturn until it makes it into one of the quarterly round-up articles in the NYTs, Post, etc. "

I think that it fairly accurate, but back to my "margins" comment. You only need a few streeteasy crazies to start the descent down, and once that happens, its a snowball rolling downhill..

Personally, I don't think the Internet will matter much. More important was the requirement that co-op sales prices are now reported. That's only been going on for a few years.

Actually, the combination of these two factors is probably the key.

Actually, here is something interesting I noted... a lot of the published reports that get the press are coming out with streeteasy / net site data. I've seen a few that were this brokerage or this researcher with streeteasy.

So, even if folks aren't reading streeteasy, I think the data is eventually filtering into the papers.

But, I've with TJS above... co-op reporting ABSOLUTELY huge. The market is completely opening up.

NYC: "I think that it fairly accurate, but back to my "margins" comment. You only need a few streeteasy crazies to start the descent down, and once that happens, its a snowball rolling downhill.."

You actually think you can affect the market here? No WONDER you post the way you do. You think you're actively causing prices to go down so you can buy lower later... that explains an awful lot. Thank you for sharing that.

Personally, I don't think anything said here budges the market one bit.

I'm not sure what side I come down on with this debate, but the last comments just reminded me of the story of the high school kid back in the early days of internet stock sites who hyped up some random stock on a yahoo finance message board and made a boatload of cash. Does anyone else remember this? Of course, real estate is a completely different market than the stock market, but a market all the same...

Before we buyers depended solely in RE agents, and maybe a few articles in the media, to give us an idea about the RE market. These days Internet, with it's never-ending democratizing powers, let us learn from people like Noah and from other's mistakes, successes and general experiences. I am excited and grateful about this. I almost bought a place several weeks ago. Alanhart advice against buying it. Now, it's price is down, and they are having no visitors in it's open houses. The realtor said they are likely to accept a low offer. So reading this post has already saved me money. We just saw the times of the "experts" fall in it's face. Maybe going back to common sense and what the people in the virtual street thinks is part of the new paradigm.

> You actually think you can affect the market here?

No, please read more carefully.

I'm talking about the 70,000 folks who ready streeteasy each month. 4 million page views.

Great if you think I can move the market, but I'm talking about a big chunk of the 70k who are getting good data off the site.... or, any of the others like it (propertyshark, etc.).

"shit talking"?? knowledge is power. Do you think it is ok to get constantly bombarded by marketing campaigns and brokers for years and years -- but negative to assess information that would lead downward pricing.....

Take what you want and leave the rest.

Yes, we the people need to take over. I don't know why anyone would want to live in Manhattan. I'd personally prefer Staten Island where I can start my own business.

Some jokers on here would insist that the internet (i.e. information) would have no impact because the only thing having an impact were income ratios.

Big night for your last night, wasn't it Joe?

what do you mean by income ratios, ootin?