Market Downturn Reminder That All RE is Local
One school of thought on the cooling real estate market is that only those cities that have experienced rapid price escalation are likely to feel significant pain on the way down. A recent forecast from Fiserv Lending Solutions calls for median prices to slip in such hotspots as New York, Phoenix and Los Angeles while…
One school of thought on the cooling real estate market is that only those cities that have experienced rapid price escalation are likely to feel significant pain on the way down. A recent forecast from Fiserv Lending Solutions calls for median prices to slip in such hotspots as New York, Phoenix and Los Angeles while seeing upside in unsexy secondary markets like Rochester, NY, Memphis, TN and Portland, ME. As we’ve discussed before, though, within the prediction for an overall drop of 2.3% in New York City there’s lots of room for divergence on a neighborhood and property-type basis.
Hot Home Markets to Cool Down [CNN Money]
Good question. I’m enough of a Brooklyn patriot to think that a lot of Manhattanites get out here and are quite happy with less density and beautiful parks and the like (Though God knows that Rattner development is not helpful in that respect … )
But there’s no doubt that Manhattanites have helped fuel the jump in brownstone prices. (Absent selling a Manhattan coop, not many upper middle income families have $400,000 to drop on down payment, no?) So if the market softens there, it seems commonsensical that it would have a spillover effect here.
If you’re under the impression that many former Manhattanites reluctantly traded properties with cheaper Brooklyn, is it unreasonable to predict that the market will reverse and a good chunk of these people will return to a more affordable Manhattan leaving a void in Brooklyn?
One last thought, a piggyback on what others say. There’s a tendency to think that Brownstone Brooklyn is somehow immune. Things have gone up therefore they always go up. That’s a risky assumption in any line of business.
The other risky assumption is that where we live, here, nowhere else, is the white hot center and everyone wants to be here and always will. This is a variation on the vacuous suburbs push people here. Trouble is, as noted above, that isn’t really borne out statistically. There’s a net and noteworthy outflow of white and black middle and upper middle class people to those ‘burbs. It’s the immigrants that keep us whole, and then some.
I agree that New York City, and the Brooklyn brownstone neighborhoods, have seemed pretty bubble-resistant these past few years. Certainly a bookie would have gone broke taking bets on a pop these past few years.
But, as they say, the past is not a predictor of future gain. Just glance around the country right now: Almost everywhere bubbles are deflating, three notably: Boston, SD and Miami. And, in this case, one need go back only a year to find experts–and some real estate industry people–solemnly declaiming on how that couldn’t happen in those cities. Well, it be happening.
Now, in this area, it seems the slowdown is very real in the suburbs, Long Island and New Jersey. And we are connected, of course. One of the reasons those such as Park Slope Renter are so despairing is that the Brooklyn market has been fed by a steady stream of lucky Manhattanites cashing out of small apartments and heading east. And they are selling their apartments to someone from … somewhere else.
Certainly it would be very strange economics to suggest that a city of 8 million people is a micro-climate when it comes to real estate. Anyway, that’s my two-cents on why a dip of some sort is all but inevitable. Whether it’s catastrophic or merely uncomfortable, well, that’s a whole ‘nother debate, no?
And let’s keep in mind that a dip, if it’s not catastrophic, has the very nice side-effect of allowing a lot of longtime Brooklynites to get an affordable house.
I can’t speak to whether there’s a real correction going on in NYC right now (cause I’m not in r.e.), but I do think there is a seller attitude correction going on. A year ago, people were pulling asking prices out of the air. My neighbor (who is a broker) sold her PS brownstone AFTER uping the asking price no less than 3 times.
As usual properties in excellent condition, located in traditionally popular areas will hold their value better than others. R.e. is a localized phenomena by nabe, by housing type, by price category, etc.
Let’s see, a 10 percent RE price decline forecast by our very own mayor Bloomberg for 2006, ballooning inventory, unprecedented risky mortgage debt, price-rent ratios WAY out of whack, affordability at all-time lows, declines already apparent in co-op, condo market in the boros, craigslist nyc peppered with reduced/motivated/negotiable listings…nahhhh, there’s nothing to see here, move along people, move along…
We moved to our country house in the woods and lasted about a year before we starting to go crazy. We sold that, but weren’t ready to move back to the city, so we chose to live in a town within walking distance to everything. Lots of artists, writers and musicians up here. Anon 2:09, I just want to clarify…this is not Westchester. I’m talking about areas that are just being discovered (Beacon, Newburgh, Peekskill, Poughkeepsie) where the average home is under $350k and not $700k. Developers and realtors want to push those McMansions, but I see lots of artists, etc, priced out of the city, who can actually afford to buy here. Great homes do still, but overpriced average homes sit longer and often come down in price.
5:32, we’re finding all sorts where we are. Yes there are conservative and religious types with whom we have nothing in common (and too many of the local town governments are controlled by party-line-towing sanctimonious sorts). But there are plenty of transplanted New Yorkers and more and more politically progressive types and artists and other like-minded souls and so we feel right at home.
Plus no car alarms, or even honking. And, honestly, not as many a**h****s as I used to encounter on a daily basis in the city. (Now I only spot them on weekends, with their Range Rovers, cell phones, and avaricious grins.)
To 2:28 – have a country house and felt we might like to move permanently – but found that couldn’t imagine living there. People were lovely and some things are great but there but found the conservatism and religiousity off putting – there was never anyone I could talk to who I could feel connected to – so we will grow old in CH I guess, at least surrounded by great people