Have we reached a bottom? Is the housing market on its way toward recovering? Recent top headlines would certainly make you think so: “US home price hints at stability” in the Financial Times; “Home Prices Rise Across US” in the WSJ. Never mind that the data was not seasonally adjusted (see below for data-crunching tips), or that NYC numbers did not include co-ops or condos (no, that’s not a typo; only homes were included, basically neglecting 90%+ of Manhattan inventory).
The more interesting tidbit to chew on is the influence of foreclosures on this data, which made up a larger proportion of all sales back in the winter. The initial wave of foreclosures came from less expensive, sub-prime properties whose low prices pulled trends lower. Now, we’re seeing the opposite effect: high-end homes are entering the foreclosure process, serving to skew price trends on the upside. Don’t be surprised if this national optimism should turn into a negative surprise on the downside in the fall and winter months, providing even more prospects for opportunistic buyers. It’s also noteworthy to remember that national housing trends don’t always apply to the Manhattan market.
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I think the value of Condos over Co-Ops has been discounted too much. The average consumer outside the NYC area sees a price point difference, and perhaps also sees the maintenance fee difference that makes up a large portion of the price. However, the freedom to sell or rent out a condo when one wishes versus the restrictions on the co-ops dramatically increase the price of a condo over that of a co-op even more than what it currently does.
Interesting, Jamal … So are you saying that the price of condos should be expected to increase at a faster rate than those of co-ops or are you underlining the reasons behind the 15-20% price difference?