I read an article this morning on Time.Com that is pretty ominous for NYC (and surrounding areas) homeowners. Deutche Bank has come out with a real estate forecast, saying they believe that home prices in the NY metropolitan area, including Westchester County and Northern NJ, will decline an additional 20% before bottoming out. NYC home prices are already down almost 20% from their 2007 high. The main ingredient for this forecast is affordability. The median house price has dropped from $552,000 in 2007 to $446,000 currently, which is still quite high. Particularly with the economic issues we're going through, and the loss of financial jobs in the NY area.
Real estate prices operate on the simple premise of supply and demand. There are many more houses listed for sale than qualified buyers looking to purchase. In many cases, those qualified buyers need to sell their existing home first, which compounds the issue.
Who knows if this forecast is accurate or not? I don't know. It makes logical sense. The low mortgage interest rates have been helping some, but the tight credit guidelines and appraisal review process at the banks are hindering any substantial rebound. I still think this is a good time to buy. Money is cheap and the market will turn around at some point. If you are considering refinancing, I would get off the fence and do it now while you still have equity. If Deutche Bank is right, a 20% decline from today's prices will suck every last bit of equity from the few who still have equity after the refinance boom of a few years ago and the days of 100% financing.
Comments(0)