Local Housing Market Headed for the Trash Can?
Real estate experts are convinced that the New York region’s housing market is about to undergo a serious correction, according to an article in yesterday’s Times. Analysts expect the coming bust to be significantly worse than it was in the early ‘90s, particularly in New York’s suburban markets. Nevertheless, Manhattan—and by proxy, pricey Brooklyn—has so…
Real estate experts are convinced that the New York region’s housing market is about to undergo a serious correction, according to an article in yesterday’s Times. Analysts expect the coming bust to be significantly worse than it was in the early ‘90s, particularly in New York’s suburban markets. Nevertheless, Manhattan—and by proxy, pricey Brooklyn—has so far mostly weathered the national housing meltdown, and the decline in values here isn’t expected to be as bad as in our outlying suburbs. During the year that ended in November, prices in the NY metro area fell 4.8 percent, according to Standard & Poor’s/Case-Shiller Home Price Indices—a drop that pales in comparison to Sun Belt cities, many of which saw double-digit declines. Still, economists predict that house prices in the region will drop by at least 15 percent in the current correction. Ouch.
Home Prices Start to Dip, Recalling ’90s Slump [NY Times]
The gloom and doom people crack me up. When there is an actual downturn in the Manhattan prime Brooklyn market, then people can start yelling bloodbath.
Keep in mind (i) no one can predict the RE market (I bought at the end of 2005, when people were predicting a huge downturn in 2006), so (ii) buy a place you can afford and think that you can live in for a few years at least, and don’t try to time the market.
The 1980s had a change in the tax law which made real estate investing less attractive as a tax shelter and high interest rates. Plus, Manhattan was a less desirable place for people to raise a family etc.–ie, more crime and dirt. So I don’t see huge drops in NYC real estate soon.
Markets go up and down, and the market may be soft for the next couple of years, but, if I wanted to buy now I would buy now.
1:07, your financial ignorance will be your undoing. You have absolutely no idea what you are talking about!!
Hmmm – all the naysayers have been saying not to buy for the past 7 years.
In those 7 seven years I have made a million dollars in equity off an $80K downpayment.
Not to mention the tax breaks, and enjoyment I have living in a much nicer place than any rental.
In the next 7 years while the naysayers keep on saying it is a horrible time to buy, I may not make any equity or I may make another million.
Renters will make nothing.
If you can afford to get into the market and sit on it for 5-10 years you will do fine.
I believe that now is a great time to buy – low rates of borrowing and a little softness in price.
If the RE market in the rest of the nation starts to level off and NYC RE prices havent tanked – what do you think is going to happen?
Another 20% increase year to year.
Sneaky Pete
I just bought my first place last year and just found out this weekend that I’m getting $10,000 back in taxes this year!!!!
I love owning!!!!
“keep trying, eventually you’ll be able to spell ‘doubled.'”
LOL @ 9:54.
Most ARM resets are tied to fed funds rate. 12:30, that’s how ARM resets work. Each year, you get a new rate.
Btw, the fed funds rate is now in free fall mode, so the real question is what happens if it goes down, not goes up.
If your ARM is resetting soon, your rate for this year will be great. Probably the same for next year too since short term rates are plunging.
If it looks like it’s going up, you have to refi into a new loan.
Anyone with a brain factors that in when they get the loan in the first place and makes sure they either 1) have resources to refi if they have to or 2) is ready to eat a higher rate for a year or two.
Otherwise, just pay more every day with a 30 year fixed loan, sleep tight and watch the bank get fat.
“…more cracks in the housing market have begun to show, and the trend is reminding some analysts of the severe downturn in the region during the recession that followed the boom years of the late 1980s.”
Deja-vu…
http://njrereport.com/80sbubble.htm
“Nevertheless, Manhattan—and by proxy, pricey Brooklyn—has so far mostly weathered the national housing meltdown, and the decline in values here isn’t expected to be as bad as in our outlying suburbs.”
SO FAR, the suburbs have weathered the meltdown as well. Five percent is hardly a serious correction for property values that have at least doubled (inflation-adjusted) from their recent lows. Neither is 15%. We shall SEE what lies ahead. And what’s expected depends on who you ask. Noriel Roubini anybody?
Actually no – in the last crash studios and small one bedrooms went down the most (% wise) and they were also difficult to sell because Banks did not want to lend on them.
Whats the point? – that historically the low-end apartment was not necessarily a safe-haven in a downturn….As you should know….past performance is not a guarantee of future results.
FSRG