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Author Topic: Why home prices may never recover - Moneycentral Article  (Read 7354 times)

Offline John Prester

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Why home prices may never recover - Moneycentral Article
« on: April 08, 2009, 03:11:11 PM »
This is a pretty good article on the MSN Moneycentral web site about real estate.  The author actually lived in our humble nabe, growing up here, and continued living in JH into adulthood.  He provides some history of the neighborhood, name checks Daniel Karatzas, and provides a cautionary tale to co-op and home owners: 

http://articles.moneycentral.msn.com/Banking/HomebuyingGuide/why-home-prices-may-never-recover.aspx?page=all

Best article I've read in a while about JH, in my opinion, despite the depressing prognosis.  I hope he's wrong, but he lays out a good argument.   

(Note to "Mods":  I would have posted this to the "Real Estate and Home Improvement" section, but figured it would just get buried there.  If you want to generate a meaningful discussion on these lethargic (as of late) boards, it belongs up front on the "Neighborhood Chat" section.  My 2 cents, FWIW.)   

For yet even more depressing real estate info, I saw this bit about the average home price in Detroit: $13,638!!!  I could have bought half a street in Detroit!:

http://mjperry.blogspot.com/2009/03/average-home-price-in-detroit-falls-to.html

When's that new wine store opening in our neighborhood?  I need a drink!
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Offline MarcusW

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Re: Why home prices may never recover - Moneycentral Article
« Reply #1 on: April 08, 2009, 05:23:05 PM »
Quote
I saw this bit about the average home price in Detroit: $13,638!!!  I could have bought half a street in Detroit!:

Ah, yes. The upside would be a lot of property for your money in Detroit. The downside would be living in Detroit.
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Offline MarcusW

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Re: Why home prices may never recover - Moneycentral Article
« Reply #2 on: April 08, 2009, 05:46:57 PM »
I read this article - lots of food for thought - the one thing I'd mention that the author didn't is that the population of the city is growing - and quickly at that. In the 70s and 80s the city was losing population quickly - and that trend has reversed now. So the price crash in the early 90s came at a time of recession after a bubble collapse - but also at the end of a period of population decline (and high crime rates). Right now, the city/borough is more populous than it's ever been, and crime rates remain relatively low - there isn't the same kind of middle-class flight that occurred before. (The reverse - gentrification - has been occurring)

Not that there aren't dangers and that prices can't fall - but the demand for housing in NY hasn't collapsed - there are more people than ever who need places here, and construction of anything but high-end condos seems to have been lacking during the record NYC population boom of the last two decades.
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Offline liam0925

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Re: Why home prices may never recover - Moneycentral Article
« Reply #3 on: April 09, 2009, 01:46:50 AM »
Quote from: MarcusW on April 08, 2009, 05:23:05 PM
Ah, yes. The upside would be a lot of property for your money in Detroit. The downside would be living in Detroit.

I've been to Detroit, I'll take Jackson Heights any day of the century!  :smitten:
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Offline JH72NY

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Re: Why home prices may never recover - Moneycentral Article
« Reply #4 on: April 09, 2009, 02:09:14 AM »

Very interesting article, John, and equally thoughtful comments, MarcusW. The NYT  has an article today that's relevant to all of this:

http://www.nytimes.com/2009/04/09/realestate/manhattan/09real.html?_r=1

I checked listings and indeed prices have dropped as stated. Two-bedroom coops/condos in Manhattan once selling for $1.2 million are now in the $800-900K range. If the trend continues and the exodus of those who were getting priced out halts,  I wonder how this affects things in JH.
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Offline Mike V

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Re: Why home prices may never recover - Moneycentral Article
« Reply #5 on: April 09, 2009, 10:01:55 AM »
In our Pre War JH's Cooperative (built in 1930's) situated in the 70's, a 865SF 1 BR, 1BA apartments renovated had a high of $335K at the peak (Fall 2007).  We currently have one on the market in Prime condition for $295,000 (since December) with no interest.  We have a 2Br, 2BA (1200SF) recently listed for $415K which were being listed in the low $500's at the peak.  I read an article several months ago that the NYC Market won't see the bottom for 3 years and that it could be as much as 30%.  Its just someone's opinion but it would certainly keep me from purchasing at today's prices.  I would wait at least a year and access the situation at that time. 
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Offline rose

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Re: Why home prices may never recover - Moneycentral Article
« Reply #6 on: April 10, 2009, 06:05:43 AM »
Quote from: Mike V on April 09, 2009, 10:01:55 AM
In our Pre War JH's Cooperative (built in 1930's) situated in the 70's, a 865SF 1 BR, 1BA apartments renovated had a high of $335K at the peak (Fall 2007).  We currently have one on the market in Prime condition for $295,000 (since December) with no interest.  We have a 2Br, 2BA (1200SF) recently listed for $415K which were being listed in the low $500's at the peak.  I read an article several months ago that the NYC Market won't see the bottom for 3 years and that it could be as much as 30%.  Its just someone's opinion but it would certainly keep me from purchasing at today's prices.  I would wait at least a year and access the situation at that time. 


i've been looking for a studio or 1 bedroom in JH since January. I've been a frequent visitor to the neighborhood since many of my friends live in the area. So far though, I find that sellers have been unwilling to negotiate beyond the token 10K off. I am not worried about declining prices since I plan on living in my apartment for a while but i am worried about offering more than market price and then finding out that the appraisal doesn't work out. 
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Offline NYC Peromyscus

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Re: Why home prices may never recover - Moneycentral Article
« Reply #7 on: April 10, 2009, 07:33:10 AM »
Aggregate statistics describing the NYC housing market always confuse me because there are so many exceptions to the general trends in individual neighborhoods, and it is hard to calculate a mean or median that reflects reality when the purchase prices range from a few hundred thousand to 40 million!

This article from a few days ago shows a steep decline in condo sales in Queens, but higher average prices of over 20%:

http://www.crainsnewyork.com/article/20090407/FREE/904079975

The higher avg price is probably due to a bunch of closings in one or two new developments in LIC.  But I wonder...condos or even co-ops with contemporary, higher-end renovations are pretty rare in Queens, so there may be buyers out there who can't afford Brooklyn or just want to be in this borough.

Too lazy to look it up, but I remember a NY Times article from last year about rising home prices in some Queens neighborhoods like Kew Gardens, where apparently many immigrant (Polish?) families have been saving and waiting on the sidelines until home prices drop.  But then when they all rush in to buy, the prices go up again on a very local scale.

In other words, it seems really difficult to look at the city-wide statistics and infer what will happen in JH over the next few years!
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Offline couturevintage

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Re: Why home prices may never recover - Moneycentral Article
« Reply #8 on: May 24, 2009, 12:51:04 AM »
Rose, if you are interested in purchasing, but want to make sure that you are not going to buy something that does not appraise at the asking price, you can demand this as a term in your contract of sale.  I would want a provision that specifically states that the purchaser may rescind the contract in the event that the appraisal does not come in at the contract price.  You can also ask for provision that allows for the purchaser and seller to renegotiate price in the event the appraisal comes in short.  But I agree, this is a concern.  I am an attorney and I have seen MANY contract deposits lost because buyers failed to get this term into the contract, and then were at a serious loss.
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Offline NYC Native

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Re: Why home prices may never recover - Moneycentral Article
« Reply #9 on: May 25, 2009, 10:13:14 PM »
Quote from: couturevintage on May 24, 2009, 12:51:04 AM
Rose, if you are interested in purchasing, but want to make sure that you are not going to buy something that does not appraise at the asking price, you can demand this as a term in your contract of sale.  I would want a provision that specifically states that the purchaser may rescind the contract in the event that the appraisal does not come in at the contract price.  You can also ask for provision that allows for the purchaser and seller to renegotiate price in the event the appraisal comes in short.  But I agree, this is a concern.  I am an attorney and I have seen MANY contract deposits lost because buyers failed to get this term into the contract, and then were at a serious loss.

If your lawyer is even on life support system  :buck2: in the hospital, that would be in the contract in the form of a mortgage contingency.  Your bank will not finance if the unit doesn't appraise, period.  The only way the bank will do so is if you chose to still take the deal and either put more money down (unless you are already putting 30% OR MORE  down.  Make sure your bank and you see eye to eye ???.  If you are smarter than the average Joe you'll personally look at the sales sheet from your coop (management will provide that).

By doing so you will see if the appraisal was flawed.  In other words, if you are getting an above average unit in an above average building in a great neighborhood and for an average price of a lesser neighborhood, than...what the heck? If the neighborhood is obviously full of potential and it is in the fast track of becoming a "hot neighborhood" or it is clear that it hasn't reached it's full potential than what's up? Buy baby...BUY!  :D
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Offline petegart

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Re: Why home prices may never recover - Moneycentral Article
« Reply #10 on: June 09, 2009, 10:52:31 AM »
The article on Money Central is interesting but irrelevant in today’s housing market.  While looking back at history is a good way to gain perspective, one anecdotal story is not a trend.   Jackson Heights is in a unique position, as time goes by, more and more people will discover it and keep prices stable.  Every real estate person says that if the property is priced right it will sell (or rent).  I see moving trucks here all the time, so people are coming and going. 
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Offline NYC Native

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Re: Why home prices may never recover - Moneycentral Article
« Reply #11 on: June 09, 2009, 05:31:53 PM »
Petegart, you are right on the money. Jackson Hts is positioned to gain from the next upswing in the market be it 5 years from now or 10 years from now. As the area that is considered "a nicer side" of town keeps expanding you see more and more buildings fixing up and increasing their rents. There is a natural event that comes from higher rents, higher incomes required to pay those rents.  In other words, outside of those rent stabilized apartments you can expect individuals of a higher income bracket moving into those places. I'm not going to get into the obviously high rents that some of the landlords push on residents but one must remember, the market dictate prices not the landlords. 

There are plenty of available apartments in Jackson Heights for rent and you can see that the ones for sale are all over the price-spectrrum. This is due to many factors...difficulty of of acceptance by Board, how well is kept and reputation of the building, is the building investor friendly and to what degree? This an several other factors can impact the sale price of an apartment. Jackson Heights is one of those areas that produce strong feelings or opinions by people, weather pro or cons I believe Jackson Heights history, topography and infrastructure will guarantee it's place as one of NYC's most important and trendy places.

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Offline rose

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Re: Why home prices may never recover - Moneycentral Article
« Reply #12 on: July 12, 2009, 06:26:51 PM »
Quote from: NYC Native on May 25, 2009, 10:13:14 PM
If your lawyer is even on life support system  :buck2: in the hospital, that would be in the contract in the form of a mortgage contingency.  Your bank will not finance if the unit doesn't appraise, period.  The only way the bank will do so is if you chose to still take the deal and either put more money down (unless you are already putting 30% OR MORE  down.  Make sure your bank and you see eye to eye ???.  If you are smarter than the average Joe you'll personally look at the sales sheet from your coop (management will provide that).

By doing so you will see if the appraisal was flawed.  In other words, if you are getting an above average unit in an above average building in a great neighborhood and for an average price of a lesser neighborhood, than...what the heck? If the neighborhood is obviously full of potential and it is in the fast track of becoming a "hot neighborhood" or it is clear that it hasn't reached it's full potential than what's up? Buy baby...BUY!  :D

thanks for the response. i've been out of the loop but i'm resuming my search for an apartment. i'm not in a hurry though, and will wait for something that i see as good value.
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Offline rose

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Re: Why home prices may never recover - Moneycentral Article
« Reply #13 on: July 15, 2009, 12:00:53 AM »
i'm going to jump in and seriously start looking next month after my cds (where my downpayment is parked)  are up. just curious if anyone knows of recent closings in their buildings for studios and 1 beds. what are the prices like and how did they compare to asking?

i see that many of the listings i looked at 4 months ago are still around...anyone have any advice for a newbie on how much below asking i should start the negotiations if i see something that i really like? thanks in advance!
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