New York Real Estate: 2007 Was Good

by Donald Hanz on Real Estate Investing, States

Despite predictions that the Manhattan real estate will slow down and follow the rest of the country’s slumping market, last year actually showed a rise in average home prices. Real estate experts believe that there are actually three reasons for New York real estate market’s good performance.

Low Inventory

The current housing market shows a surprisingly low inventory of New York properties. With such a low supply, many sellers are receiving multiple offers and enjoying a nice profit.

Wealthy Buyers

Last year, many wealthy buyers bought extraordinarily expensive apartments and condos, fueling the increase in property value. A large number of buyers with deep pockets, who are looking to invest in one of these Manhattan properties, still remains and could keep the market relatively hot for a couple more months.

Economic Situation

Wall Street workers have yet to feel the effects of the looming recession and buyer confidence was quite high. Year end bonuses were still good and financial workers invested most of their money in real estate.

Of course, signs of a sober market can be felt as early as now. The same workers may receive leaner bonuses for this year driving the demand down; borrowers will have to struggle with stricter lending regulations; and foreign buyers might think twice about the potential return of these New York properties.

The subprime mortgage market crisis is also a factor that could drive the nation to a recession. Millions of mortgages have gone into default, leaving lending institutions with no choice but to declare bankruptcy and the market brimming with foreclosed homes for sale. Predatory lending practices during the most recent housing boom is said to be the culprit behind the foreclosure crisis. With a large inventory of foreclosure homes, new developments and existing home sales are dramatically affected.

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