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Nouriel Roubini, the New York University economist who gained renown for accurately calling the housing bubble, has purchased a condominium in Manhattan worth $5.5 million, according to a Bloomberg News report.
Public records show Roubini took out a $2.99 million mortgage to buy the condo on East First Street, according to Bloomberg. The apartment is reportedly a 3,700-square-foot triplex penthouse.
Roubini was dubbed "Dr. Doom" because of his many pessimistic forecasts about the global economy. He recently said there is still a risk the U.S. economy could slide back into recession, Bloomberg notes, and last month he said another "disaster" will happen if U.S. house prices fall again and prime mortgage defaults increase.
Does Roubini now think housing prices have bottomed? Bloomberg reached Roubini on his cell phone Friday, but he declined to comment on the condo purchase.
Perhaps the economist has succumbed to "frugal fatigue" -- a term that refers to when consumers, beaten down by the "Great Recession" become tired of fretting about every expense and treat themselves again.
The condo's listing by Halstead Property broker Richard Orenstein certainly makes the home sound alluring.
"Connected by a custom cantilevered steel staircase, each level of this amazing home offers something unique and unforgettable," the listing reads. "On the first floor, you'll find a massive living/dining area bathed in southern light with 11-foot beamed ceilings, exposed brick walls, a wood-burning fireplace, and light from a 50-foot expanse of oversized windows."
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What did he sell?
It was a $5.5 million house and he took out a $2.99 million mortgage, meaning he put over $2.5 million down... when you have that kind of money do you think it really matters if you wait for the bottom or not? You buy what you want when you want it.
The big picture is terrible. It is beyond repair. If the FED wants to stand in front of the coming train, then goodbye to the FED. As Bernanke prints more money, credit will deflate even faster! Who would want to lend money to the US government and the US consumer who has already displayed inability to pay. Consumers consume, go into debt and go bankrupt. Only producers prosper. That is not us.
Home prices are still a bubble compared to historic norm. According to case shiller index, we are still 20% above long term averages. Typical bottom comes at 20% below average. But this is not your typical recession. This is a deflationary crash. This is Great Depression material. These averages themselves are based on a money supply that was inflated by borrowing for many decades. When the money supply deflates, existing prices and salaries cannot be sustained:
http://www.kondratieffwavecycle.com/housing-bubble-bust/
Granted Bernanke's press will be doing overtime, he can provide support to nominal prices. But that does not mean credit dependent sectors such as housing will go up in nominal terms. Quite the contrary, while food, gas, gold sky rockets, home prices can collapse. Beware! It has happened to past generations. Do not think we are immune. Today the debt problem is much much bigger than the days of Great Depression.
Even though Bernanke has tripled the base money supply, people did not see an increase in their pay check. As long as salaries stagnate, or fall, housing will be in bad shape.
Whatever you do, do not get into debt. If you want to buy, buy cash down. Even if prices do not fall, in many cases, rent is cheaper if you consider mortgage interest, property taxes, condo fees, maintenance, lost interest/investment income...
Here's where and when housing will really bottom:
http://viableopposition.blogspot.com/2010/12/next-housing-bubble-is-this-perfect.html
The bursting of the generational housing bubble is going to make the price declines of the past 3 years look small by comparison.
Dr. Doom didn't get the memo.
Just because the man says things that you may find "pessimistic" does not mean that they are.
I bought a brand new house just before the bubble (Jan 2001). My CA house went from 150k to 300k at the height of the bubble and now back down to 169k. So it's at a 19k difference in 10 years. If the market is not at the bottom yet, then it is pretty close. I'm lucky I didn't fall into the false equity trap so many other people did. I did take a home equity line of credit for 50k to consolidate bills during that time and I've managed that pretty well. Overall I've done okay.
Dr. Doom epitimizes the old saying, "Even a blind pig finds an acorn once in a while".
wtf never mind about his house, why didnt he answer the question or was the writer so enamored with his purchase that he forgot to get an answer tot he question
I read here that one of the foreclosure experts thinks the housing market is rebounding: http://blog.foreclosures.com/tides-are-turning-2011-housing-to-rebound/
Let's hope it does, time will tell.
And you trust these so-called experts because....?
As expensive as houses still are, those not in depressed/crime-ridden areas,...and inflation going up with wages stagnant...I don't see any big rush to go into eternal debt.
@The Beev, I agree. The average working person(s) is not going into debt after being burned the last 2-3 years. Only the rich or well to do are taking that dive. The other thing is - WHY IS HOUSING SO IMPORTANT? FOR YEARS IT WAS HOUSING THIS HOUSING THAT BECAUSE people did well economically having a house. Don't people realize those days are over?
Why are we still watching the housing market? It's not a sure thing, it's not gold. We're judging our wealth, our economic stability by housing. This never happened until the 1980s-90s. Before that, people we happy to have a house.
I have a nice, brand new, 3 bedroom, 2 bath home for sale sittiing on 1.8 beautiful wooded acres just 1/2 mile from a boat launch on one of Tennessee's most beautiful lakes, Lake Wattsbar. I am only asking 149,000 for it and wonder if that is high but when I read about guys buyinig property like this I think I am under-priced.
What does the price of a NY condo have to do with the price of a Tennessee cabin? or are you trying to advertise?
Its just that he made a lot of money by doing mr Doom. That too is a bubble in his personal finance. therefore he bought a condo so the worthless money turned in something real. In other words: he has a pretty place to live in now. I personally think prices will drop 50% or more. The only thing that is of real importance is do you have a place to live, do you have food and do you have loving people around you. In whatever city in the world you will not have the first two. So by buying a condo in a big city Dr Doom is doomed.
Its just that he made a lot of money by doing mr Doom. That too is a bubble in his personal finance. therefore he bought a condo so the worthless money turned in something real. In other words: he has a pretty place to live in now. I personally think prices will drop 50% or more. The only thing that is of real importance is do you have a place to live, do you have food and do you have loving people around you. In whatever city in the world you will never have enough food in times of crises. And a really big crises will come. So by buying a condo in a big city Dr Doom is doomed.
"Frugal Fatigue?"
Is that a new euphemism for being tired of living within your means?
I'll believe the housing market is recovering when our house sells. It's a large house (6 bedrooms/7 baths) in an upscale neighborhood with magnificent mountain views. We've only had two nibbles since March, even after dropping the price considerably. Oil people from Texas are the predominant buyers in our area, but I'm not holding my breath, even with the price of a barrel of oil nearing $90.
I live in Henderson Nevada which is right next to Las Vegas. This area was particularly hard hit by the housing crisis. Right now all the Casinos in town are hiring again. They just posted over 8000 jobs mainly because a new large casino, the Cosmopolitan, is opening. You can buy a 2 to 4 year old house here for 70cents on the dollar of what it cost to build. I followed Mr. Roubini's advice in 2005 and sold 21 rental properties I owned. It sounds like to me the time is right to get back into the market.
We just bought our 11TH rental home in Phoenix. I just can't believe how low the prices are!! The last two were in decent neighborhoods and got them both for under $55,000 and rented them for $950 per month!!! With no HOA....what a bonus that is!!!!
Yep, its definitely fugal fatigue setting in. My, those homes are spendy in the Big A.
The sad part is its really only "borrowed earth" we live upon, but our species hasn't figured that out yet as we blindly run around madly trying to make our way and forge our future.
The housing bubble will be eclipsed by the bond bubble.
i live in charlotte north carolina, been watching the same houses for last two months that i want to buy from Taiwan, they keep on going down, people are getting desperate, the housing bubble still has a long way to go i believe.
What a joke. With 3 million foreclosures in 2011 forecast and 2 million in 2012 and your predicting prices are stabilizing? Get a life! Total morons.
@mipak is right. There are approximately 4 Million homes in foreclosure. The banks should just give the houses away to the poor and the homeless.
Let me see, those payments are over $15,000 per month....I guess being an "economist" pays pretty well!!!
Cathy, very interesting article, with a premise I have espoused for a few decades now. When I was a teen back in the 1980's, I saw people buy homes only to have prices fall, though obviously not to the levels currently occuring (or that I expect to occur) forcing many families to wait to move, as many people were flipping homes back then too. I saw that prices even then still were outpacing income. With the 90's housing bubble making that gap even bigger, my wife and I chose not to buy, and we still haven't regreted it. Could we afford to buy? Yes, but why? I keep telling my friends things haven't bottomed by a long shot. Low interest rates on an over-priced home is still a bad deal. If a home is worth more than 2 1/2 times your pre tax income, you are paying too much, and you will be doomed to be paying just interest for far too many years to be a good deal for your finances. Homes are where you live, not an investment, and they never should have been thought of as such. An IRA is a retirment investment, never a home, but if you treat your home as if it were an IRA of 401(k)/403(b) then you should also expect the market risk, but no one did that.
With wages basically being stagnant for the past 30 years, I have to ask, whom did the homeowners expect to pay higher and higher prices for homes? It's not rocket science to see that if, factoring in even low inflation, people's buying power wasn't increasing, a bubble was forming and would burst. Now the economy for the past decade has caused massive unemployment, lower wages, and still people want to be able to sell their homes for prices way too high. Sorry folks, but you gambled and lost, and like in Vegas, you are best served by stopping the gambling. Your homes will never be worth anywhere near what you paid for them; there will be a shrinking base of buyers as fewer children were born to boomers and others; and the nail in the coffin is that no one has the money to pay the prices you want to get paid, not with unemployment around 10% (and that is just those still receiving benefits AND looking for work. If they ran out of benefits or stopped looking for work, they aren't "officially" counted, so the unemployment rate is likely more around the 14% range).
Lets see, for Doom to qualify for his $2.99 million dollar loan his annual salary must be in the neighborhood of $800,000. Too bad if his Fed interest deduction is taken away when the Obama plan to revise the tax deductions takes place. It is doubtful that he put $2.5 million cash down. Would he be that dumb?
Yes, the housing pricing go down further in this year again due to the economy and debit crisis.