She is sinking by the bow
“Median home price: $455,000 Median income: $63,000 Affordability score: 13.9% In the nation’s largest metropolis, New York, home prices took a steep dive during the quarter, to $455,000 from $500,000 three months earlier. That was not enough to dislodge the city from its rank as the least affordable metro area in the land. Only 13.9%…
“Median home price: $455,000
Median income: $63,000
Affordability score: 13.9%
In the nation’s largest metropolis, New York, home prices took a steep dive during the quarter, to $455,000 from $500,000 three months earlier.
That was not enough to dislodge the city from its rank as the least affordable metro area in the land. Only 13.9% of the homes sold there during the quarter were affordable for median income families, who earned $63,000. That was still a major improvement from two years ago when only 5.1% of homes sold during the fourth quarter of 2006 were affordable.
The good news is that New York households have been barely brushed by the foreclosure crisis so far with only 0.71% receiving some kind of foreclosure filing during 2008.
Housing markets in the New York metro area had held up comparatively well, even after declines started to hit other boom markets hard, but with the financial services industry recording huge losses and shedding jobs, home prices may be in for some steep declines.” Taken from a CNN webpage. Do we need anymore proof that home prices are falling in Brooklyn?
I absolutely do think interest rates will go up. In fact, that’s why buying a house now is cheaper than waiting for price drops. Sad but true.
I don’t understand why many of you think interest rates are going to stay at 4% for the next 30 years? Assuming the Fed can no longer cut any more interest rates can only go up once we get out of this economic situation. My numbers are not that far off because it is not before long interest rates will have to come up to at least 7 percent. People are eventually going to have to get some interest for keeping money in a bank.
One other thing to consider: I agree the price runups of the last few years were obviously related to the mortgage bubble, but nonetheless, the total cost of ownership in recent years, adjusted for inflation, has been very low because mortgage rates were so low.
Well, we’re saying the same thing. In other words, prices may have been crazy high but mortgage rates were low, so the house was still cheaper to buy than if the reverse were the case.
Hannible, you are right that much of New York City real estate is not affordable for households making under $130,000. But you’d be surprised how many high earners there are in this city, especially compared to other areas. Also, there are tons of one bedrooms and studios in Queens and the Bronx that are very affordable by single people earning $50,000 to $80,000 a year.
I used to own a place in Jackson Heights. It was cheaper than renting in Carroll Gardens.
A lot of people buy a small place, a starter apartment, they can afford. Then five or ten years later they sell it and use the equity to buy a much nicer, family size apartment when they are older, married, and have kids. (Of course, they have to sell when the market is going up, obviously.) By that time, they’re probably earning a higher income too.
The key is to live frugally, save your money, don’t use credit cards. And it sounds like you’re doing all that, so you should be fine.
Hannible- Your math is way off.
$400,000 loan amount @ 5% = $2147 + $500 = $2657
even @ 6% = $2,398 + $500 = $2,898
Those are very realistic numbers for a couple making 60k each, which is low for NYC income standards. My girlfriend is a NYC teacher in her twenties and she makes more than 60k.
Hannible, I defer to you to tell us why New York real estate has suddenly become average priced. There are centuries of price history showing that New York real estate is more expensive than most other parts of the country.
What makes New York City real estate stand out from the rest of the United States? Is it Wall Street? What would happen to New York City if Wall Street were to tumble into a great depression? Would New York real estate follow? There is nothing else but the love of New Yorkers to keep the values of homes up and even that requires alot of work.
corolla is correct – trillions of dollars have been printed out recently. This will cause the value of the dollar to sink very fast. It will take about a year to hit, but soon we will see $10 for a gallon of milk, average new car will be $80,000, and a small studio co-op in park slope will run over a million.
You are basically assuming that NYC prices should be equal to the average price for the whole country, which doesn’t make sense.