Housing Report: Broad and Deep Pain Across U.S.
An article this weekend in the Real Estate Journal (which, unlike its parent paper, is free online) told of widespread doom and gloom for the nation’s housing market. The article sites a recent report by Economy.com that predicts that prices will continue to slide for at least another couple years in roughly 100 metropolitan markets…
An article this weekend in the Real Estate Journal (which, unlike its parent paper, is free online) told of widespread doom and gloom for the nation’s housing market. The article sites a recent report by Economy.com that predicts that prices will continue to slide for at least another couple years in roughly 100 metropolitan markets across the country. The biggest risks lie in California and Florida, the report says. As for New York, the forecast is for a relatively benign decline of 3.5%. Elsewhere on the East Coast, Economy.com says that Boston has already bottomed out. The good news? The current downturn “so far looks more like a correction than a crash on a national scale.” A spoonful of sugar helps the medicine go down.
Prices in 100 U.S. Cities Expected To Decline [Real Estate Journal]
Photo by sercasey
just for the sake of discussion: a few people mentioned that one way of the market correcting for the huge gap between the cost of renting and the cost of owning is for rents to go up.
we’ve obviously seen that happen, at least a little, in the last few months (no-one buying, everyone renting, inventory non-existent). but, really, is that sustainable, in the long run? i mean, people’s salaries are not going up. where are new yorkers going to pull an extra couple of hundred a month from, to be able to afford climbing rents?
i’ve seen an awful lot of expensive short-term sublets on craigslist. people going on vacation for 5 days trying to rent out their bedroom in a park slope share for $120 a day, that kind of thing. i’m wondering if that’s people who can’t really afford their rent to start with, trying to make up the difference any way possible… or just a natural response to supply-and-demand: if tourists are willing to pay $120 a night to stay in nyc, why not capitalize on them?
OK, I just spanked myself. Happy?
Donatella, hop off the self righteous “I can ride it out, I’m awesome” horse for just a bit. Maybe you can, but many cannot, so have a little sympathy for your fellow brownstoners who may not be as set as you.
It seems as though you may not feel so secure, as you sit here calling people names (“chicken little”) to make yourself feel better about your decision to own. You would not be alone in that, and I think equally, there ARE people who do not own who are a little doom and gloom. Put yourself in their position for just a second. If we all did that, we’d see that we all have vested interests and no solution or outcome is perfect.
But I agree with all above who point out that owning will always cost more than renting, with maintenance, etc. I don’t think anyone with a brain would argue the costs should or will be equal. The issue is whether they are so completely out of whack as to justify house prices right now – not 30 years down the road, or even 10, but right now. Thinking about that doesn’t make one a “chicken little” necessarily.
Anon 11:40. Well said. I love these pointy headed discussions about renting vs buying. If we talk about real estate as a “housing solution”, i.e. where you LIVE, there is enormous value in having an owner’s control over one’s living circumstances.
Tenants are protected by leases but leases can end and not be renewed. Owners can sell apartment buildings. Tenants have rights but they are nothing compared to the control of being an owner, particularly with owning a live in rental property, in my humble opinion, even though owning a building is a lot of work.
If owning an apartment or building is your housing solution, you get a tax benefit, a chance to build equity, the shot at equity appreciation (be patient….), and best benefit of all, IT’S YOURS. In this environment, if you own an apartment building, you are golden. So your house goes down 3.5%, who cares? I mean really? My place went up some crazy amount in 2 years on paper, so what do I care about a 3.5% decline on paper? If your numbers work, and you can cover the costs and these days you are getting higher rents, don’t you think my fellow brownstoners and I can ride out a sideways to slightly lower market? If you are a huckster of some kind, looking to buy and flip endlessly making money and/or you are overextended, that is another issue.
Maybe I am howling at the moon, but I think all of this Chicken Little business is for the amateurs who are in the business of writing dramatic magazine articles or hi-drama TV reports.
OK, there’s my rant of the day.
agreed, Anon 12:06. we all make more or less educated guesses at what a wise investment would be, given our personal circumstances, and then hope that our guesses are proven right by the market.
that’s what these discussions are all about, right? personally, i hope the decision to continue to rent for a while is a wise one, and that i’m not kicking myself a few years from now. but you never know, eh?
“(Please note that it seems like there are a lot of doom and gloom renters on this board. Why would a die hard renter even care to read this board unless they were about to buy and wished prices down? )”
I disagree. I have heard plenty of owners on here agreeing with many of the above statments – why would you call anyone a doom and gloom renter unless you were an owner hoping prices didn’t go down anyway? Everyone has their motives, you included.
You can say the costs of owning and renting should equalize if you assume that there is no value to what you are living in. The fact is that at the end of extended period of owning, you have an asset that is worth something. (generally more than what you paid for it but for sake of argument, lets assume its the same in real dollars minus inflation)
So the cost of owning should be the cost of living somewhere + cost of investment.
You may argue that the difference in renting vs owning should be less than it is now…and thats open for discussion. But to say they should be the same makes no sense.
(Please note that it seems like there are a lot of doom and gloom renters on this board. Why would a die hard renter even care to read this board unless they were about to buy and wished prices down? )
“Who said renting and owning should cost the same? It shoudl not. Owning a home is an asset approach with related expenses of carrying…renting is an straight expense. If they are anywhere close together, something is majorly wrong.”
What on earth are you talking about!? Of course they should cost the same if you take all costs into consideration.
One of the costs of renting is not having as much control over the building you are in, along with the threat of eviction. Some people don’t care about that: for those people, renting vs owning is exactly a spreadsheet calc that assumes the asset rises with inflation.
Some people regard this very differently and are prepared to pay a premium over renting.
A third group perhaps even are the opposite: for them, the “hassle” of ownership is actually a negative. They may even rent when owning is cheaper on paper.
So you have these three groups but they are united around a common baseline: cost of renting = cost of owning.
When house prices have moved so far up that all three groups find renting cheaper, then either the market falls or rents shoot up. Take your pick.
What other relationship can there be supporting house prices? fairy tales? I’m sure a broker wants you to think that.
“an asset approach with related expenses of carrying..” sounds more like a liability than an asset for now.