Dog Days for U.S. Housing; Is NYC Next?
The Times is talking doom and gloom about the national housing market after stats were released showing that home prices fell 14.1 percent in March as compared to the same month last year. While primo New York City—Manhattan in particular—has remained mostly immune to the rest of the country’s housing woes, other once-resilient markets are…
The Times is talking doom and gloom about the national housing market after stats were released showing that home prices fell 14.1 percent in March as compared to the same month last year. While primo New York City—Manhattan in particular—has remained mostly immune to the rest of the country’s housing woes, other once-resilient markets are faltering. Seattle, for example, has only started posting a huge rise in unsold inventory. Some say the housing market hangover could last for another couple years. It’s like eating beyond your stomach’s capacity, said Ronald J. Peltier, the chief executive of Home Services of America, which owns real estate brokerage firms across the country. We have huge indigestion. According to an article in the Observer, though, New York City may yet have to reach for the Mylanta: Recent rises in inflation (the price of a six pack of craft beer is up $1!) and crime, coupled with lots of job losses, could very well mean the worst is yet to come.
In Housing, the Strong Turn Weak [NY Times]
Lead Indicators? The Price of Beer, Hurricane Season [NY Observer]
Photo by bburke782.
The people you speak of, 4:33 are not buying property in New York.
So I really don’t see your point.
New people are not moving to NYC to go onto the welfare system or to find “affordable housing”
4:33…the commenter at 4:14 is not only misinformed but can’t make any logical leaps from one concept to the next. I believe that he/she can’t actually understand what others are writing; never did well in reading comprehension.
2:57 please………..half the people in this City are here to suck the teet of the government and pass on the tradition to their children. There are 1 million units of public housing (with still the constant cry for affordable and subsidized housing). Then their sons go to prison at a cost of $70,000 a year each. shall I go on?
Millions still on welfare – Save the “top of the heap” stuff for the movies.
4:14 – you are incredibly misinformed.
YOU need to read comment at 1:43 to see why the rent/own ratio in NYC will never again probably be what it is in other parts of the country.
Prices will go up until buyers start to fear that they might come down. Then they’ll come down.
Regardless of crime rates. You can rent really nice places in Brooklyn, without risking losing all your savings.
For Dave the arbitrageur who doesn’t understand his own business:
When owner-occupants are willing to pay more than the rental value of a property, rental owners happily sell their rental properties to owner-occupants. None of the current postings or recent sales would be purchased by a rational investor intending to rent it out. That means every landlord could make more money by selling rather than renting. Some will. Supply of owner occupied goes up, of rentals goes down.
Other land owners build new properties or convert non-residential properties or renovate old stuff to current standards or build out or down or up. Supply of owner occupied goes up.
Meanwhile some potential owners decide it is stupid to pay more to live in a home that is going to depreciate than to rent a nicer place. 1:43 thinks it’s impossible to compare rents to purchase prices, but the rest of us do it all the time. Some people will decide that paying double for the same living space just to call it “mine” doesn’t make sense. Demand goes down.
End result: markets converge. Value of property as a rental and value of property as owner-occupied, long run, will be reasonably close to each other.
Either rents are doubling, or sales prices are dropping by 50%. Since rents are much less susceptible to bubbling, they are more likely to reflect the actual costs and benefits of living in NYC.
NYC may be wonderful and it may be on an island, but that’s already built into the rents, not a reason why it should cost twice as much to buy as rent. Co-ops are less likely to be immediate parts of a foreclosure crisis, but they rarely stray far in price from comparable condos, for obvious reasons. Rent stabilization has no impact on the market for expensive apartments, since it doesn’t apply once the rent gets over $2k. None of these factors justify an out-of-whack ratio between rents and sales prices. Only tulips do.
Responding to 2:51:
I think that the price increases in co-ops in New York (which were never as steep as in condos)(and keep in mind that a co-op will always cost 100-150K less than a comparable condo,) were do to people who genuinely want to live and own in New York for the medium to long-term, and could afford to do so. The boards would not approve speculators, and have flip taxes to discourage flipping, too. I think that New York truly is the capital of the world. It is in many ways unique from the culture of the rest of the U.S., and I think there are *somewhat* different laws of real estate that apply here as well. (for exapmple, I think the more supply you build in new york, the more crowding you will have. A paradox yes, but that’s what I’ve seen.) What’s really keeping New York prices high still, is the fact that som many high paying jobs are located in the city and the metropolitan area. There’s a new phenomena of suburban retirees selling there homes in Hartsdale, etc… and moving into an apartment on the UWS, instead of moving to Florida or Arizona. ALso, the low value of the dollar is making New York real etate a bargain for foreigners. Only four things can lower NYC real estate prices: If the credit crunch gets worse (although mortgage rates are still very low, historically); If there is massive unemployment; If there is another terrorist attack (although actually I think people will have learned from the bargain hunting of 9/11 and they will snap things up much quicker this time); A good ‘ole fashioned crime wave! (I’m hoping for this one, so there’ll be less annoying Yunnies and drunk little girls running around.)
How about those 7 people shot in Harlem in an hour? That must have given those new harlem buyer a pause.
Meanwhile if the police had entervened and shot one of them, there would be protests – Where is Al Sharpton now when they shoot each other? that is okay?
A whole new crop of buyers because of Sex and The City!!! WOW Wait till The What hears about this. It’ll completely dash his whole premise on this market!!!