Several weeks ago, I promised to provide occasional updates about my family’s house-hunting efforts. After nine years living abroad, we’re returning to the U.S. – northern New Jersey, to be exact – in June. As motivated buyers, I figure we’re a rarity in a truly dismal property environment. I’ve just read a column by the WSJ’s Brett Arends detailing the continuing decline in American house prices. In my mypoic view, the most intriguing phenemonenon continues to be the relatively robustness of the New York metropolitan area.
As Arends writes, ”New York is down 10% over the last year, including a 4% decline in the last three months. That is still better than the average. Whether the market can withstand the crisis on Wall Street and widespread layoffs there remains to be seen.” He also notes, “Over the long term, average home prices have tended to track average earnings. And by this measure the market may have much further to call.” One would think so. I find it hard to understand why the bottom hasn’t already fallen out in the neighborhoods within 50 miles of Wall Street. New York’s financial firms and related employers began laying people off by the thousands at least six months ago; those still clinging to jobs surely haven’t seen their average earnings rise during this period. Clearly, NY-NJ didn’t experience a boom-era glut of new housing stock even as shiny new McMansions popped up hourly in the American southwest and mortgage purveyors lured unfit buyers to spend their life savings on five-bathroom, three-car-garage abodes. Do readers have thoughts about why the epicenter of the financial fiasco has held up so well?