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August 11, 2008

Calculating the Real Value of Your Home

miamiordumbo_0808.jpg
In the midst of all the talk about the tanking housing market, the New York Times reported this weekend not about what your home is worth, but what it should be worth, according to assorted economists. They looked at regional pockets of the U.S. and tried to calculate how much homes are overvalued there, which helps them figure out where and when the market might bottom out completely. Here's some surprising news: While Miami, Phoenix and Chicago have the most overvalued homes, New York homes, at least according to the Columbia Business School, are five percent undervalued. Huh?
Finding the Right Price for a Home [NY Times]
Miami or Dumbo? Photo by Victoria Belanger.




Posted by lisa at 10:01 AM | Comments (29)
Categories: Quality of Life

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Comments

"Huh" is right. I'm no market bear but saying NYC is UNDERvalued right now is nuts.

Posted by: plgdude at August 11, 2008 10:10 AM

"...at least according to the Columbia Business School..."

Sneaky.

Posted by: DOW8000SP800 at August 11, 2008 10:35 AM

I can't fathom how someone can think the prices in NY are undervalued, especially in Manhattan. The prices don't make sense and they have increased substantially over the years. The average apartment sale price in Manhattan hit a new record high of over $1m in Q1 of 2008. That's a 47% increase from a year ago. That's insane!!! New construction in Manhattan rose over 27% in the past year with an average price per sq ft of $1,473. Although housing prices in the other NYC boroughs have started to come down, it is no way undervalued and we have not seen the botom yet. Compared to the other boroughs, Staten Island has the most affordable housing.

Posted by: Jackslope at August 11, 2008 10:54 AM

I think the possible reason for the "undervalued" comment is that in comparison to other world cities, NYC is still considered "cheap"

Think about it. Are Americans going in and scooping up properties by the bushel in London, Paris, Dublin and Dubai??

Nope. Cause it's still inexpensive here.

I'm not saying that NYC won't correct (I think it will) but some people don't seem to understand the role that NYC plays in the world. It is one of THE most desirable cities in the world to live/play/shop/etc etc etc and it's still only the 22nd most expensive city in the world.

According to an article I read last week, London is 40% more expensive than NYC. Do you think London is 40% more desirable than NYC? I don't.

In fairness, I do think London will correct a bit too...

Posted by: 11217 at August 11, 2008 11:03 AM

There were other studies mentioned in the article that said NYC was still overvalued, but not as much as Miami and Pheonix. Given that the studies did not discuss areas within a city, it is hard to apply this story to any given neighborhood without more iinformaiton - if it is even available.

Posted by: 11233 at August 11, 2008 11:09 AM

This market is so out of whack and speculative, no one knows when and how much prices will adjust. Everyone thinks they know how to calculate the market, but it's bull. If analysts were so certain about how the market is going to pan out in the near future, although we are in a bad credit crises, I think there would be more stability for the mere fact we would know what the next move would be.

Posted by: Jackslope at August 11, 2008 11:27 AM

Now you see what I'm talking about! The Asshats on this blog is unbelievable! New York is undervalued, huh? This is a illustration on a Asshat is. Take this fucktard 11217 for example.

"I'm not saying that NYC won't correct (I think it will) but some people don't seem to understand the role that NYC plays in the world. It is one of THE most desirable cities in the world to live/play/shop/etc etc etc and it's still only the 22nd most expensive city in the world."

Shoving the broom up your ass saying "I'm having fun"!

Then

"According to an article I read last week, London is 40% more expensive than NYC. Do you think London is 40% more desirable than NYC? I don't.

In fairness, I do think London will correct a bit too..."

No Assfuck all of it will correct! As soon the Hot Money leaves the set your "investments" will get creamed.

This is Greed and Delusion at it's finest!

The What

Someday this war is gonna end..

Posted by: what at August 11, 2008 11:35 AM

Please Brownstoner Just ban me!!! I want to ban me!!!

The What

Someday this war is gonna end...

Posted by: what at August 11, 2008 11:36 AM

Everything is going to be alright. No need for all the animosity. Why so much hatred from you WHAT?

Posted by: Zohan12 at August 11, 2008 11:42 AM

What=hateful? Say it isn't so!

DoWhat=Why do you want to ban yourself? And if you do, which one of your characters? DOW8000 or The What or both?

Posted by: wasder at August 11, 2008 11:55 AM

What - I would love to hear your thoughts on Staten Island. I live there and I think it's a great place to buy a house and raise a family. I'm very interested on your views on this topic.

Posted by: Zohan12 at August 11, 2008 12:00 PM

Zohan12 you must be coming off some bad weekend acid trip to ask for that!!!!!!

Posted by: daveinbedstuy at August 11, 2008 12:06 PM

I have to say that the installation of the registered guest policy seems to have drastically increased the quality of discussions.

Now The What seems to be the only "person" ruining most of the threads with his 10 day old links from yahoo news.

If we could get rid of (or ignore him) I think we'd be doing even better with some great conversations (with people who can actually form complete sentences and answer questions when asked).

Posted by: 11217 at August 11, 2008 12:13 PM

wasder: The what needs to get banned so he can escape before his 90 day prediction never comes true. Then his alter ego, DOW, can continue to post the same stupid crap without having to explain why he was wrong about the end of the world.

Posted by: 11233 at August 11, 2008 12:14 PM

dave - I was being a little facetious and sarcastic. What type of valuable information could he possibly add to any topic. On the other hand you always have something insightful to say.

Posted by: Zohan12 at August 11, 2008 12:19 PM

The What made some pretty offensive comments in a thread from Friday, and I'm actually quite shocked that sexual comments of that vulgarity would not be banned.

Posted by: 11217 at August 11, 2008 12:19 PM

I know why the DoWhat needs to be banned but I am curious why he/she/it wants to ban themselves. That's the more interesting aspect of the equation.

Posted by: wasder at August 11, 2008 12:22 PM

because he's desparate for some validation of his outrageousness?

Posted by: dittoburg at August 11, 2008 12:33 PM

Lets get back on topic and forget about all the nonsense posted by ignorant people who want attention.

The market is in turmoil right now, but that just means for new homeowners now is the best time to find a great bargain. I'll be moving into my brand new home on Staten Island in the next few months. I was able to get a great deal with amazing tax incentives. It's very rare these days to find a new house that is qualified for tax abatement. Maybe this is what some of you out there may be looking for. Take a look if your interested.

http://www.opal-ridge.com/thumbgallery.asp?propertyid=4&proppageid=41

Posted by: Smatchums at August 11, 2008 12:59 PM

Guys.....I'm a homeowner who purchaed in the last six months, but honestly.....saying NYC is undervalued is the dumbest thing I've heard in a while....Staten Island is great for the value, so is the Bronx if you can take its challenges.....all else is for people who want to live where they want to live....not a get-rich-quick scheme....homes are not selling, mortgages (especially jumbos, which describes everything in manhattan, queens and bk) are not flowing to even people with good credit, thousands of financial industry people are out of luck working down their severance packages, and we are talking about NYC being undervalued....PT barnum, where are you now......a sucker is born every minute......for obvious reasons, the real estate community is doing its usual cover-up job to keep the party going for a few months more and wrench the last few suckers into overpriced pads....prices are down only 5%, but inflation is running 5% in the opposite direction.....so tell me young mathematicians, how much did you really lose boys and girls? well known studies will tell you people will not sell emotional investments like homes for less than they paid, so inventory builds as people are more obstinate with homes than if it were a futon on ebay...sellers concessions, legal fees, closing costs paid, new kitchen packages, seller's financing, ect and lagging housing data are all hiding the fact that in the next few months or years it will take a big haircut to get these homes moving....so if you want to stay in your million dollar pad to mentally block the fact that it is a 700 thousand dollar pad......by all means, don't let me or the facts wake you up....

Just kidding GUYS....like I said, I own....so....NYC is undervalued by at least 25%!!

Posted by: slappy at August 11, 2008 1:26 PM

Slappy,

I agree...NYC will correct, although in terms of your inventory argument, it would appear that Manhattan (at least) is not doing what you predict it should be doing. Despite the fact that summer is always a slow time and that sales are slowing considerably since last year, it seems people simply aren't putting their homes on the market, unless they absolutely have to...

http://www.urbandigs.com/2008/08/manhattan_inventory_dropping_f.html

Posted by: 11217 at August 11, 2008 1:50 PM

smatchums - you didn't recently sell a mansion with an indoor swimmin' pool in Dyker Heights did you? It was opal-ridge-esque. But to the max.

Posted by: dittoburg at August 11, 2008 2:05 PM

Since we're speaking of Staten Island real estate, someone still needs to buy this house:

http://newyork.craigslist.org/stn/reb/792018801.html

I actually grew up on that block and always loved this house. It's a gorgeous property. If I had $600k to blow on real estate that's where it would end up.

Posted by: setancre at August 11, 2008 2:07 PM

thank for the link....but i agree with the "cycle" poster of that thread who compared it to 2007 and said inventory was up 30%.....many potential sellers out there don't even want to put their homes on the market because of the climate...but that can't be measured and is anecdotal....the only question would be, "Why are sales down so much?", and then you start with that negativism we all call common sense.....I'm still looking to possibly buy another property, but I am certainly looking for some price drops...life is a chance....I'm not trying to time the market exactly, but jerk-off articles like the one we are posting on make my stomach turn....NYC is undervalued? So says who? NYC sellers?NYC brokers?NYC idiots?

...the feel of those open houses sure is different.....i used to go and have the brokers feel like they were doing me a favor by letting me in....i think they felt that ingnoring you would wet the appetite...like when a bouncer would deny entry to a club, while its totally empty.....now they want to know my kids names, what i think about the yankees pitching and call me like i'm their damn girlfriend......this game is over, at least for a few years, and I'm waiting for everybody to get the hint that the cat is TOTALLY out of the bag, and everyone knows these units are not worth anywhere near asking

Posted by: slappy at August 11, 2008 2:28 PM

NYC undervalued? Depends on where in NYC you are looking! Manhattan is a very different market that the other 4 boroughs in my opinion.

Jackslope - the average price per square foot $1473? Is that a real number? I can't see how an average working couple could afford a 1.5 Mil 1000sf apartment as a main residence. Then throw children into the mix and you are running tighter on cash and tighter on space! If you wanted to add a second bedroom it will cost you an additional 440K for another 300sf?!? wow.

While Manhattan is out of many New Yorkers reach, outer boroughs show value and perhaps the bring the city's average to be "undervalued". I guess if a buyer knows where to look they can find great value in NYC. Im renting now and looking to make a move soon so discussions like these peak my interest.

Zohan12- Good luck in your venture into Staten Island I'm sure its a great place to raise a family! And the prices in the community you are looking at are a fraction of Manhattan's prices!

Slappy- Where did you purchase in the last 6 months?

Will the market continue to adjust? Who knows for sure? Can anyone predict the absolute bottom of the market? NO!
Is it a good time to buy Real Estate? Maybe we should all take some advice from a famous entrepreneur:

"The way to make money is to buy when blood is running in the streets."
John D. Rockefeller

Posted by: NYnative at August 11, 2008 2:58 PM

NYC undervalued? Depends on where in NYC you are looking! Manhattan is a very different market that the other 4 boroughs in my opinion.

Jackslope - the average price per square foot $1473? Is that a real number? I can't see how an average working couple could afford a 1.5 Mil 1000sf apartment as a main residence. Then throw children into the mix and you are running tighter on cash and tighter on space! If you wanted to add a second bedroom it will cost you an additional 440K for another 300sf?!? wow.

While Manhattan is out of many New Yorkers reach, outer boroughs show value and perhaps the bring the city's average to be "undervalued". I guess if a buyer knows where to look they can find great value in NYC. Im renting now and looking to make a move soon so discussions like these peak my interest.

Zohan12- Good luck in your venture into Staten Island I'm sure its a great place to raise a family! And the prices in the community you are looking at are a fraction of Manhattan's prices!

Slappy- Where did you purchase in the last 6 months?

Will the market continue to adjust? Who knows for sure? Can anyone predict the absolute bottom of the market? NO!
Is it a good time to buy Real Estate? Maybe we should all take some advice from a famous entrepreneur:

"The way to make money is to buy when blood is running in the streets."
John D. Rockefeller

Posted by: NYnative at August 11, 2008 2:59 PM

NY Native - I already live on Staten Island. I think you are mistaken me for Smatchums. I know the area that Smatchums is moving to on the South Shore of Staten Island and it is a beautiful neigborhood. More than half the houses in the Opal community have been developed and sold even in the tough market we are in right now.


I like that quote...I can't agree with you more. Anyone who has cash right now should invest in the real esate and stock market because you can find great bargains everywhere. It's those people who were smart and brave enough to invest in the Stock market after it crashed in 1929, who made a fortune in the years to follow. People should capitalize on a down market.

Posted by: Zohan12 at August 11, 2008 3:41 PM

This article may refer to the greater Metro area, which may very well be undervalued by some measures. Manhattan and acceptable Brooklyn are clearly overvalued and in for a sharp correction, in my opinion (no shock to anyone who has read my posts), but that doesn't necessarily hold true for the rest of the City or for outer areas like Westchester and (gasp!) New Jersey, some of which have been in a soft market for a couple of years.

If the Colombia b-school survey took the lazy approach (and I would bet they did), they relied on Metropolitan Statistical Areas (for which there is readily available government data, including housing figures from OFHEO, the government agency that releases the Housing Price Index every quarter). The New York MSA is quite large and includes at least Westchester and parts of Jersey. Probably more.

Posted by: lechacal at August 11, 2008 3:43 PM

Zohan12: Sorry, my mistake. I guess Staten Island may an interesting alternative. Certainly the pricing makes it attractive. Is transportation an issue there? I work in downtown Manhattan. There is something to be desired about a fully detached house with a yard and garage! Its definately worth a thought.

lechacal: Westchester and New Jersey are certainly other alternatives but I hear taxes in these areas can be a tremendous expense, is that true? Which one has higher taxes?

Posted by: NYnative at August 13, 2008 7:54 PM

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