Saturday, January 07, 2012

4th Quarter Manhattan Real Estate Prices Stayed Level

So according to the latest numbers as reported by the one of the largest (by volume) real estate agencies in Manhattan, prices remained steady during the last 3 months. That's a relief for home owners on the island.  According to the same report (and reported by New York Times), the actual number of sales fell.

Real Estate Prices in Manhattan are Steady, but Sales Fall

Might sound scary, until you understand why this likely happened - a 5.9% drop in the number of properties available for sale. In other words, in classic economics 101 form, supply went down, so price went up, or at least stayed the same.

I think that's the key story here. With supply down, prices held steady.  Other ideas - such as last year's increase in end-of-year closings to take advantage of the first-time buyer tax credit - are secondary at best.  Scarcity helps to drive up prices. 

There are still some issues keeping the market from flowing smoothly. For one, it's hard to get a loan if you're trying to borrow just over the Fannie Mae limit, but not way up into the luxury range (also mentioned towards the end of the NYT article).  So the fact that enough properties are selling to keep prices steady despite the adversity of the mortgage market is good news to me.

Unless we end up with more inventory.  According to an article in Crain's New York Business last week, NYC's foreclosure rates are going up as more properties complete the 1-2 year foreclosure process required in New York State.  The statistics were not broken out over the five boroughs, and Manhattan's share of foreclosures has been small so far.  But the trend bears watching.

Tuesday, January 03, 2012

Starbucks raises NYC latte prices

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Starbucks raises NYC latte prices

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Starbucks, not cool!


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2012 Predictions from General Investment Experts

I get Zack's daily "Profit from the Pros" email sent to me every day with a quick review on how the stock market did and commentary on what's next for the immediate day. Today I chose to read one of the linked articles as well entitled : "Treasuries, Stocks, Gold or Real Estate - Best Investment for 2012?"

1 of the analysts quoted picked real estate securities (home builders, REITS, etc.) as the top pick. Another made a comment, made by several other experts in recent national media, that the housing "bottom" could occur later this year.

I feel a little skeptical about this prediction. For one thing, there is still a lot of inventory sitting there. And another problem is that real wages (which means wages adjusted for inflation so you can compare one year to another) continue to drop. The fact is, when the majority of homeowners can't afford homes, then home prices drop.

Again, this is penalizing people who bought homes in the last 5-8 years, during the bubble, and have stayed current in their payments. They are going to continue paying much higher monthly payments, or sell at a price which won't recoup them enough for a down payment on a new home if they have to move. If they stay current, and wages continue to drop, then they will not have enough disposable income to a) enjoy life and b) keep the economy afloat with all their purchases.

Analysts are getting optimistic about 2012 because corporate earnings have rebounded a bit. I hope they are right. Naturally my livelihood depends on it, but I have to wonder if it wouldn't be a good idea to give all those hardworking people a little break?