Wednesday, July 26, 2006

New York Metro Area 43% Overpriced

From CNN/Money:

Most overpriced home markets

After years of local home markets getting more and more overvalued, the trend has reversed, according to an analyis published this week.

Each quarter, Local Market Monitor, which provides research to the real estate industry, assesses 100 markets, comparing selling prices to "equilibrium" values. Company president Ingo Winzer bases those values on local economic and population growth, construction costs, vacancy rates, household income in the area and interest rates.

The number of overpriced markets in the first quarter, defined as having a median home price more than 15 percent higher than equilibrium, fell by two to 38. In the prior quarter, the number of overvalued markets had climbed to 40 from 37.

Winzer says that 56 of the 100 markets he covers are now fairly priced, up from 54 last quarter.

The median home, however, is still overpriced by an average of more than 14 percent, Winzer judges, and homes in many markets are still way too high. This matters because those markets have much more potential for the kind of steep decline that could be disastrous for homeowners - and the local economy.

City/Actual Price/Equilibrium Price/Difference/Rating

Atlantic City NJ $262.9 $186.6 41% Overpriced
New York-North New Jersey NY $431.0 $300.5 43% Overpriced
Philadelphia PA $247.2 $217.9 13% FairValue
Hartford CT $237.2 $224.2 6% FairValue

20 Comments:

Blogger thatbigwindow said...

43%? That is about how much values went up in the past few years..

7/26/2006 12:29:00 PM  
Anonymous Anonymous said...

43%? That is about how much values went up in the past few years..

What do you consider a "few years"? If we go back to 2000, many homes appreciated by 100%

7/26/2006 12:36:00 PM  
Anonymous Anonymous said...

By Winzer's figuring, Santa Barbara is the most overpriced housing market in the nation (see table below). The median home there costs $567,300, 80 percent more than it should.

The median ASKING price in Bergen county is $639,000 for a SFH, and $445,000 for a condo, $579,000 combined. It seems we are on par with Santa Barbara.

JAY

7/26/2006 12:43:00 PM  
Blogger thatbigwindow said...

anon@1:36

I mean 2004 by "a few yrs"

7/26/2006 12:43:00 PM  
Blogger patient homebuyer said...

and this is supposed to be a major revalation!

40% wthout a doubt

7/26/2006 12:54:00 PM  
Anonymous Anonymous said...

anon 1:36pm

If a house appreciates by 100% since say 2000 and then loses say 50% of it's value, it gave back ALL of it's paper gains (not realized, thru a sale; ps:refi'ing is not realizing it is going into debt.)

7/26/2006 12:59:00 PM  
Anonymous Anonymous said...

If costs are approx. the same, I would prefer Santa Barbara over New Jersey.

JAY

7/26/2006 12:59:00 PM  
Anonymous Anonymous said...

refi'ing with cash out, of course.

7/26/2006 01:00:00 PM  
Anonymous Anonymous said...

Steep drop in Florida home market

http://money.cnn.com/2006/07/26/real_estate/Florida_fading_markets/index.htm

House sales and prices in the Sunshine State have ceased their steep upward run.
By Les Christie, CNNMoney.com staff writer
July 26 2006: 1:49 PM EDT


NEW YORK (CNNMoney.com) -- House hunters in Florida, where some of the hottest markets have been in recent years, have taken a vacation from buying.

June sales volume was down nearly 30 percent statewide - 18,089 homes were sold in the month, according to figures released this week by the Florida Association of Realtors. Condo sales volume fared even worse, down 35 percent to 5,421.

Nationwide, the National Association of Realtors reported Tuesday, sales volume dropped 8.2 percent.

Prices in Florida have flattened as well. Year-over-year prices rose just 3 percent last month, to a median of $257,800. That was after years of consistent annual gains in the double digits -- home prices have nearly doubled during the past five years.

Condo prices actually fell in June, to $212,500 from $215,700.

Some of Florida's erstwhile hottest markets experienced steep sales-volume declines.

Naples, where the median single family house sells for $451,500, had a 48 percent drop in unit sales. Prices were down 8 percent.

The Sarasota metro area had a 40 percent fall in sales volume and a 3 percent drop in prices. West Palm Beach-Boca Raton sales volume dropped 39 percent and prices were flat.

Major condo markets hit hard with sales volume declines included Tampa, down 47 percent, and Miami and Fort Lauderdale, both down 31 percent. Some smaller markets really took it on the chin - Punta Gorda logged just three condo sales, a 97 percent drop.

With mortgage rates for a 30-year fixed at about 6.8 percent, according to Freddie Mac, the monthly costs of buying a home has increased significantly in the past year. Rates were at about 5.58 percent last year. On a $200,000 30-year mortgage, that's a difference of about $158 a month.

Property insurance costs in Florida also skyrocketed on the heels of the disastrous hurricane season in 2005. Nearly 98 percent of Florida's population lives in coastal areas, according to the U.S. Census Bureau and insurance rates have risen to reflect their vulnerability to storm damage.

And soaring energy costs have made it much more expensive to air condition that home and to operate a car, leaving fewer dollars to pay for real estate.

7/26/2006 01:12:00 PM  
Blogger chicagofinance said...

Anonymous said...
If costs are approx. the same, I would prefer Santa Barbara over New Jersey.
JAY
7/26/2006 01:59:27 PM

No you wouldn't.

Don't get me wrong, SB is lovely, but would you really want to have to live in that social continuum?

SoCal ain't where its at.

7/26/2006 01:16:00 PM  
Anonymous Anonymous said...

Chicago, I know what you mean, but you can't beat that weather. Actually, my real preference is Monterey CA.

JAY

7/26/2006 01:46:00 PM  
Blogger Mr. Oliver said...

Ugh, the whole LA area sucks.

L.A. is a city? Hardly. To me, it is Long Island with bigger buildings, one big sprawling mess with no public transport to speak of and a fraction of the roads they need.

Chicago, NY...now those are cities.

7/26/2006 04:50:00 PM  
Anonymous Theo said...

While I love the weather in Cali, the big strike against it is my, perhaps irrational, fear of waking up inder a pile of rubble, or perhaps having my home slide into the ocean or perhaps get taken over by wild brush fires. Other than that it's just dandy.

I'll take Jersey thanks.

7/26/2006 04:51:00 PM  
Blogger chicagofinance said...

Mr. Oliver said...
Chicago, NY...now those are cities.
7/26/2006 05:50:10 PM

When they have power... eecccchhh

7/26/2006 04:59:00 PM  
Anonymous Barky said...

Earthquakes are as likely to hurt you in California as icicles falling on your head are in New Jersey.

I agree that So. Cal can't compete with a real city like Manhattan, but we are talking about North Jersey here! Bad traffic, bad sprawl, long commutes AND terrible weather!

7/26/2006 07:17:00 PM  
Anonymous Anonymous said...

43% overpriced, but it requires less than that - about 30% - to drop in order to reach what they feel is equilibrium.

Not that 30% is a joke.

7/26/2006 07:36:00 PM  
Blogger Mr. Oliver said...

Yeah, Con Ed really farked things up out here. Luckily, we never lost power. However, the entire area around the N stop at Ditmars was out for over a week.

7/26/2006 08:43:00 PM  
Blogger chicagofinance said...

Mr. Oliver said...
Luckily, we never lost power.
7/26/2006 09:43:14 PM

COOL [literally]!

Luckily cat food is canned and doesn't spoil. ;-)

7/26/2006 09:27:00 PM  
Anonymous Anonymous said...

queens,

lovely place to live.

7/27/2006 06:08:00 AM  
Blogger Mr. Oliver said...

Luckily, Mr. Oliver only knows from dry food, so don't have to have the nasty canned stuff around. Ewwwww.

And, yes Anon @7:08, I agree. Astoria has been a fantastic place to live, one I'll miss much when we eventually move. We've got very reasonable rent, in a safe, vibrant neighborhood with some of the best food in the City and less than a half-hour commute door-to-door.

7/27/2006 10:35:00 AM  

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