Bernanke Says What Everyone Already Knows
May 18, 2006 — It’s “pretty clear” that the housing market is cooling off but it looks poised for a soft landing given overall strength in the economy, Federal Reserve Chairman Ben Bernanke said Thursday. “In combination with rising interest rates, affordability is becoming much more difficult and therefore as you would expect you are…
May 18, 2006 — It’s “pretty clear” that the housing market is cooling off but it looks poised for a soft landing given overall strength in the economy, Federal Reserve Chairman Ben Bernanke said Thursday. “In combination with rising interest rates, affordability is becoming much more difficult and therefore as you would expect you are seeing some cooling in those markets,” Bernanke said in a question and answer session after speaking to a Chicago Fed conference on banking regulation. “We’re seeing slowing in sales, slowing in starts. There also seem to be signs that prices are not rising as quickly as they have been for the past few years,” he said. “It looks to be a very orderly and moderate kind of cooling at this point,” Bernanke said, adding that the U.S. labor market is strong and incomes are rising.
Bernanke Sees Cooling Housing Market [CNN Money]
Uh…”rent” in the CPI is an economic calculation of what a homeowner would rent his or her house for, not actual rents.
3.46,
I don’t think that anyone would dispute that owning property in Brooklyn, particularly out of the fringe areas, is a good thing. Noone is predicting a 75% price crash: people are talking about a 10-15%, maybe 20% correction off of prices that have more than doubled over the last couple of years. With the expectation that prices would presumably remain flat or trend upwards after that. And then start increasing again in the long term.
So it’s not a matter of who will have the last laugh: the only question is if you want to be the person buying at the very top of a market that ebbs and flows.
Am I the only homeowner who hopes these predictions are right? I’m not moving, so my interest in the sales market is only theoretical. But I rent an apartment, so if rents go up, that’s actually worth something to me. That’s a nice thing about a multifamily–it’s a hedge if rents go up while buyers cool their heels.
People who already own their homes in Brooklyn will have the last laugh. Prices in Brooklyn have risen in the last year in most neighborhoods. They are softening a little in some of the fringe areas, but for the areas that you actually want to live in they continue to rise, albeit at a slower rate.
“This kind of psycholgy is atually the biggest danger to sellers, if enough people decide to wait because they blv prices will fall, then prices will fall.”
Totally true. I stated earlier that I am waiting to buy – I’m not alone. I have numerous friends, all professional couples who can afford to buy (not “bitter renters”) who have decided to sit it out.
The more people I talk to about it, the more I find in the same boat. I feel like prices are out of line so I’ll wait it out. Buyers have essentially been getting killed the past few years to buy homes based on affordability instead of value – now it’s sellers’ turn to sweat a little. it’s how a market works.
How can any rational person actually believe that the nominal value of what they paid for a real asset will not fluctuate?
I have rented out two apts in Cobble Hill for the last 10 years. I can tell you the market has definitely firmed up in the last 12 to 18 mths, after being rather soft for the few years preceding that. I can also saw, obviously only anly anecdotally and based on personal experience (I can’t whip out a chart for you) that when people begin to blv that home prices will decline, the will often decide to rent and wait for them to fall. This kind of psycholgy is atually the biggest danger to sellers, if enough people decide to wait because they blv prices will fall, then prices will fall. Crash, probably not, but fall enough for people who paid top dollar over last 2 years feel some pain, yeah, that is likely to happen.
Brooklyn townhouses ARE different because the are still so much cheaper than equivalent houses in Manhattan or even than condominiums in Brooklyn. They are not building any more brownstones, and everyone loves them! Additionally, rising Brooklyn rents give townhouse prices a nice hard cushion that they can always fall on if need be.
PLG is not horrible. Maybe you shoud visit there before you pass judgement. ’nuff said.