Today there was quite a prominent story in the print edition of the NY Times, about the 4th quarter Manhattan housing market. Oddly enough, the online version of the story is kind of buried in the Times website.
In short, the number of sales in the 4th quarter declined by 27% from a year earlier. Prices were down from the record highs, but still higher than a year ago. Of course there are different reports that come to different conclusions about prices, and cite different reasons for why the data is the way it is. Price per square foot is holding steady, which may be one of the more accurate indicators. But it seems quite clear that one of the things that is happening is that people are spooked by news reports about the housing bubble, and it has made them hold off from buying in the last couple of months. Everybody loves a bargain and no one wants to seem like the chump who overpaid at the top of the market, so the more buzz there is about prices declining, the more it is likely to become a self-fulfilling prophecy. (Maybe the webmaster at the Times just bought a place and wanted to hide the story in order to protect his investment!)
I can't quite decide where I think things are going to go. I do think prices are crazy, and it just seems wrong that people in Manhattan can be paying $400,000 and up for studio apartments. Although there are studies showing that housing affordability hasn't drastically worsened in recent years due to lower interest rates, etc., there is just no way that a lot of middle class people aren't being priced out of the housing market. $400,000 may be an affordable price for many middle class families, but how do you squeeze a family into a studio? Manhattan is a weird example-- it's always been expensive for middle class people. But I think it's getting worse. The problem is that the rich are getting richer, and the rich love owning apartments in Manhattan.
Of course my experience isn't universally representative of what it is like to live in NYC, but of everyone I know in my own age range, all young, professional types, you'd think that as we moved from our early 20s to our late 30s, and moved up in our careers we'd be able to afford nicer apartments in nicer neighborhoods. But instead it's been just the opposite-- we can't even run fast enough to stay in one place, we're all sliding backwards, into smaller apartments or further out into the outer boroughs or suburbs. This isn't such a terrible thing-- more of those outer borough neighborhoods are now lively, fun places with plenty of services, restaurants, entertainment and all the things that make us want to live in NYC in the first place.
So I don't know what to think. Will things hold steady or just stumble a bit? Will things crash? SHOULD they crash? It's hard not to feel conflicted as my own contract is signed now! Most of the time I still feel quite confident that I will be relatively ok even if prices do come down over the next few years... but then I worry that it will be like when I bought GM! My shares are down about 57% as of this morning. Ugh.
Wednesday, January 04, 2006
Today's housing market news
Posted at 10:23 AM
Labels: real estate
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5 comments:
Yesterday the fed said they may stop rising interest rates soon. Very good news for the housing market in my opinion, interest rates will stop rising and I think we'll get a clearer sign of where real estate is heading. Personally, I tend to be more optimistic and I think there will be minor increases in prices this year.
Yes, but you can't live in your GM shares...
I had a HUGE anxiety attack after buying my house in 2004 thinking I had bought at the top of the market, yada, yada, yada. Then I obsessively watched the For Sale signs that appeared in my neighborhood. Within 6 months a comprable sold in my neighborhood for $50,000 more than I bought my house for. That, of course, made me feel great.
Now that I am stretching toward the 2 year mark in my home I am not paying as much attention to the sales around me. Now I am focused on enjoying the home and the area. If prices start dropping in my area will that cause me to panic sell my house? Heck No! I have a monthly payment I can well afford and bought a place in a location I am happy with. As long as you have done those two things you will be fine.
There was a segment on Bloomberg Radio regarding this study this morning, and I believe they were interviewing one of the authors. The interesting thing to me he pointed out was that prices in areas surrounding Manhattan were growing much more rapidly since those that can't affort there move as close by as they can.
As long as you like the place and can comfortably make the payments, I wouldn't worry about it (even though I do about our place!).
Didn't you say you'd like to buy another one in a few years? If prices go down, you'll get your second one cheaper. It's sort of like dollar-cost-averaging into your properties...
Good points all, I do try to remind myself that I am buying a home more than an investment.
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