Displaying items by tag: property

(New York)

A new study out of Harvard makes a very interesting point about US home prices. While real estate prices have seen a strong and steady rise since the bottoms of the Crisis, and prices in many markets seem very lofty, the truth is that the cost of owning a home actually hasn’t risen for the last thirty years. How is that possible? The answer is that while home prices have risen compared to income, interest rates have also fallen strongly, meaning the monthly mortgage payment it costs to actually own a home has remained pretty much flat sine 1987 (on an inflation-adjusted basis).

FINSUM: So this is a good point, but the reality is that the monthly payment does not account for the huge down payment that families now need to come up with (which they did not back when interest rates were at 12%).

(New York)

The US real estate market looks set to change in a big way. Brokers and developers are sensing it, and consumers are making it happen. The change is in the geography of the market. The new SALT limits in the updated tax code mean that wealthy residents of higher tax states like New York, New Jersey, and California, now face much higher tax liabilities. As a response, many of them are seeking to buy homes and domicile themselves in tax-free states like Florida, Texas, or Nevada. One real estate developer in Nevada explains the situation, saying “If you’re a wealthy tech executive from the Bay Area who can live wherever you want and you have a $3 million income, you would have $399,000 a year in savings here. That’s a lot of money to spend on real estate”.

FINSUM: We think this trend will be both long-term and very bullish for markets like south Florida and other sizable metropolitan areas in low tax states . The high tax states might face a reckoning, especially those without a major metropolitan area to suck in residents (e.g. Oregon).

(New York)

If we were to tell you that median sales price per square foot was down 18% from a year ago in New York City, would that make you worry about the real estate market? Well, that is exactly what has happened, all alongside sales volume hitting its lowest level in six years in the Big Apple. The developments have brokers and real estate developers worried there, but perhaps the whole country should be paying attention. New York has experienced a great deal of new apartment inventory over the last few years as developers have pushed through many new projects, all of which seems to have conspired to oversupply the market.

FINSUM: The boom in real estate since the Crisis was always urban-driven, and so the downfall may be an urban-led one too. New York’s real estate woes are not unique, so we would not be shocked to see prime urban property fall in value across the country, especially with mortgage rates on the rise.