NY City Lowers Expectations From Home Sales
In a NY Daily News article, some information slipped out that shows the industry insiders know the market is slowing. "The Bloomberg administration has sounded a rare note of pessimism about the residential market, by budgeting a drop in city tax revenue from residential sales and mortgages in the year starting July 1."
"The Office of Management and Budget bases its prediction in large part on a Mortgage Bankers Association forecast of a nationwide drop in mortgage refinancing and new-mortgage origination."
How could this kind of pricing continue? "Last year, high-end sellers could charge 5% more than the last comparable sale and get their price, even if the prior deal was done only a week before. This spring, they can get 1% more."
10 Comments:
I sure wish MY county would lower its expectations of tax receipts. Taxes are heroin to governments and once they get that flow incoming, they will raise rates instead of letting the gross decline.
From your lips to God's ears, Ben. I am living in a 2BR 1 bath apartment purchased in 1997 for what was then a reasonable amount and what now seems a pittance, but it doesn't matter because I cannot afford to move my growing family out to a 3BR.
Why? Because I don't have $2 million to spend on a nice one, or $1.5 million for one with obvious flaws. My once middle-class neighborhood has been "discovered" by richer types priced out of their own nabes, and all my longtime neighbors are as baffled as I am by the influx of fancy restaurants and $700 strollers. My apartment has likely appreciated 2-2.5x and it doesn't do me a damn bit of good.
I never thought I would be in the position of converting a closet to a nursery, but if the bubble hasn't popped by the time #2 arrives, it may come to that.
Sarah
Let me guess, Sarah. You're in Park Slope.
BTW, there were some Harlem HDFC coops listed in the NYTimes website, listing from $25K for a one-bedroom to $145K for a two bedroom, all needing total renovation. All cash, with income restrictions (about $52K for a single person, $60K for a couple), no resale for 5 years, a 30% flip fee. I left a message on the realtor's voicemail. By the time he got back to me, a couple hours later, all the apartments had offers, some with multiple offers (he had over 200 calls by the time he got to me). In fact, he ended up with other 700 responses by the next morning, and sent out a mass email in response.
What this said to me is that working class/middle class people are DESPERATE for affordable/realistic housing in this city. Why should it be so hard for someone to own a place that won't bankrupt them?
Thanks for the blog, Ben. At least now I know to save my pennies and wait till the HUD auctions begin....
with all of this stuff happening, i find it amazing that the mayor of nyc is completely committed to building a new stadium for the ny jets at hudson yards... that's 26 acres of land on manhattan that's undeveloped...
Well, what if Bloomberg does build more housing? That's just more people who will need services, there'd be more pressure to extend the 7 line but no concomitant revenue stream to pay for it, there would be enormous demand for schools in the area and that costs a bundle. Not that I am in favor of a stadium, mind you. The traffic alone would be hell, and in my studies, such projects never end up paying back what they cost, let alone making the big bucks.
1:03 AM Anon,
No offense... but that's ridiculous... the city needs more housing... and your mayor himself, said that if more housing was created it would cause an over-supply... that's the issue... he's worried about over-supply, not traffic or transportation issues...
Just came across this article about real estate by Henry Blodgett...the infamous dot.com stock analyst:
Is Your Apartment Like a Dot-Com Stock?
http://newyorkmetro.com/nymetro/realestate/features/realestate2005/12016/
excerpt:
"Nor is it true that “real-estate prices never go down.” On the contrary, from 1986 to 1995, after the stock market crashed and the government eliminated some real-estate tax shelters, the price of the median co-op dropped by nearly half, from about $360,000 to about $200,000. Those who bought new pads in the mid-eighties were underwater for more than a decade (and weren’t talking about what a great investment real estate was)."
so much for the 'at most a 10 to 20% drop in prices' crowd..
..DenverKen
Most of the people I know in NYC feel that the real estate market will never be as low as it was in the early 90s. They point to drastically diminshed crime and higher quality of life, the presence of super-rich types that never used to exist (hedge fund managers, e.g.) who don't blink at paying outrageous prices with their Monopoly money, and an absence of some of the external factors in the last soft market, such as a glut of condos and co-op conversions. This time, they say, there hasn't been as much overbuilding, so the market will be more protected even if the rest of the country falls. None of these people are happy about this; all either rent and want to buy, or own and want to trade up. I don't know a single person who's happy about this market, and it's driven up the prices of the local suburbs to such a degree that none of the people who have lived there for the last 30 years could possibly afford to buy their own homes. This is not the New York that I grew up in.
Am I the only one who read this article and thought "this guy has been reading this blog?" Some of his paragraphs about market psychology were right out of "deb's" comments, etc. It was uncanny.
for above, I'm referring to the New York Magazine article linked in the Comments section, not the daily new's article.
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