Thursday, September 20, 2007

Bubble? What Bubble?

New Yorkers like to think that they are immune to the housing bubble bursting because, well, quite frankly, have you looked at the cost of a two bedroom co-op in Brooklyn? But for those who are really paying attention beyond the affordability of half a million dollars and still not enough closet space, it's not about if the bubble will burst, it's about how painful it will be. And if you rent? There's no bubble because there's no space. Rents climbed 7.2% last year. Make nice with your landlord.

This week's New York Magazine's cover asks The $1,333,316 Question: How Long Before Our Real Estate Bubble Pops? What's with the price tag, you say? Well, that's the average sale price of all co-ops and condos and Manhattan, so you'll forgive us for choking on our leftovers, but for those with PiggyBankBlues that's a little too Lifestyles of the Rich and Famous. The article goes on to break down the risk factor expensive neighborhood by expensive neighborhood (it is real estate obsessed New York Magazine, after all). Williamsburgh prices are down by almost 10 percent, Bed-Stuy/Bushwick has 225 properties on the auction block, while Park Slope has zero.

    "But brownstone Brooklyn’s real hedge comes from its mix. Park Slope and its ilk are home to a highly mixed demographic, with bankers next to teachers next to Safran Foers, notes Corcoran’s Deborah Rieders. That lends stability if, say, financial-industry bonuses go south next year. The locals are also stable in another way: Though plenty of residents cashed out during the recent run-up, many more have been here a while, which means not everyone bought at the top. In other Brooklyn hot spots, Gallant says, quite a few recent buyers could soon “wake up and say, What was I thinking?” (The wild card, of course, is Atlantic Yards. If 6,000 apartments are slammed into the neighborhood in a few years, they’ll play havoc with both the area’s makeup and its supply-and-demand equations.) The danger zones are likely to be areas that have glommed onto the cachet of these old reliables, where asking prices may be overreaching: the bottom edge of the Slope, say, or the fringe where Carroll Gardens fades into Red Hook."

* photo of David Blaine at the Lincoln Center by Knut Vidar Siem


hr_g said...

Haven't they been saying the NY housing market bubble will burst for like 10 years? I've been hearing this ever since I moved to NY.

PiggyBankBlues said...

Yeah, but our burst isn't like other bursts, or at least that's what I think. Our burst is more about dampening the pie in the sky selling prices. I think in the end it just shrinks the profit margin for the seller, but since the margins in the city are so consistently high, it's not like a seller is losing money. Unless, of course, they're flipping properties, and who in their right mind would do that unless they have a lot of dough.

Ms. M&P said...

I think the New York and DC markets are similar, but DC is probably a little more vulnerable to falling prices. People keep telling me that when an administration changes, the DC market changes with it because so many people move into the city. Interesting stuff.
Do you think that the condo market is flooded in NYC? People talk about that a lot in DC.

PiggyBankBlues said...

The market in NAYC isn't flooded, but that's just my personal opinion. There's a lot of development, but nobody is building affordable housing. When I say affordable, I mean around half a million.