Tuesday, October 04, 2005

The Slowdown May Be Under Way

The New York Times brings us this report on third-quarter housing numbers, which showed a decline in median price as well as a buildup in inventory, even in seemingly ever-hot markets like New York.

"A real estate slowdown that began in a handful of cities this summer has spread to almost every hot housing market in the country, including New York.

. . .

In Manhattan, the average sales price fell almost 13 percent in the third quarter from the second quarter, according to a widely followed report to be released today by Miller Samuel, an appraisal firm, and Prudential Douglas Elliman, a real estate firm. The amount of time it took to sell a home was also up 30.4 percent over the same period.

. . .

In Manhattan, the average sales price of co-op and condominium apartments fell 12.7 percent, to $1.15 million, in the three months that ended on Sept. 30 compared with the second quarter, according to the Prudential Douglas Elliman report. The median sales price - which means half of homes sold for more and half for less - fell 3.2 percent, to $750,000.

. . .

What is more, some mortgage lenders have started to tighten credit standards, making it harder for buyers to get loans.

'Low interest rates and easy credit standards are just about over,' said Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley."

Link:

Slowing is Seen in Housing Prices in Hot Markets

Monday, October 03, 2005

Better to Rent Now Than to Buy

Last week, The New York Times did an analysis of renting versus buying a similar apartment or house in various metroplitan markets. With respect to New York City, it seems like it is clearly better to rent unless either (a) you are very bullish on continued price appreciation or (b) plan on staying in the purchased unit for a long time.

"After five years in which rents have barely budged while house prices in New York, Washington, Los Angeles and elsewhere have doubled, renting has become a surprisingly smart option for many people who never would have considered it before.

. . .

[O]wning a home today is more expensive than renting in much of the Northeast, Florida and California. Only if prices rise well above their already lofty levels will home ownership turn out to be the good deal that it is widely assumed to be.

In Manhattan, 1,000-square-foot, two-bedroom apartments on the Upper East Side now rent for about $3,700 a month. Buying a similar apartment costs around $1.1 million, which can translate into monthly payments of $6,000 or so.

. . .

[W]hen owning is more expensive every month, buyers are betting entirely on price appreciation.

For new home buyers, prices in New York would need to rise roughly another 13 percent over the next five years for the average buyer to do better than the average renter over that span. . . . Over the next decade, the break-even increase is about 25 percent in New York . . . ."

Link:

Is It Better to Rent or Buy