Posted by Leonard Steinberg on December 6th, 2012

Analysts at Goldman Sachs predict in a new report (published on Friday) that the end of the crash in home values is actually within view……and will bottom out in mid to end 2012. The report however forecasts price declines of at least 6% for New York and Atlanta. Could the timing of this news have anything to do with the diminished bonuses expected over the next few months and the large layoffs in the financial markets?

Goldman’s analysts, Hui Shan and Sven Jari Stehn, project that the national S&P/Case-Shiller home price index has 2.5% to fall before it hits bottom next summer. The Case-Shiller index of prices in 20 large cities is likely to fall 3.5% before hitting bottom in the second half of 2012, they say.

So how exactly do these forecasters reach this conclusion? And should we hold them accountable for this prediction? The analysts constructed a new model of home prices in 147 U.S. metro areas, estimating an “equilibrium” home price for each. That measurement is an expected home price based on population, income, lending costs and construction costs. Nationally, they say, home prices are close to this equilibrium level after deviating far from it during the boom years.

The analysts’ modeling also takes into account short-term price changes, including factors like the excess supply of homes on the market and the level of subprime loans in a particular market. After doing all of this number-crunching, the Goldman analysts projected that the strongest U.S. markets will be Detroit, Miami and Cleveland. They are forecast to show price increases of 5%, 3% and 1% over the next two years.

So if you thought Goldman’s analysts are being tough on New York, think again:  Prices in Portland, Ore., they say, should decline by 8% over the next two years.

We shall see…..we are all entitled to an opinion, yet personally I find averages a pure joke and often useless information. Looking at the news of the impending sale of Sanford Weil’s penthouse at 15 Central Park West, asking $ 88 million, one has to wonder. If this price (over $ 12,000/sf) drops by 6% to a little over $ 11,000/sf I think we will survive.