OFHEO: Housing Update
A: Today's Calculated Risk post reveals The Office of Federal Housing Oversight (OFHEO) 2006 Q1 housing report released today which basically says, "Increasing sales inventories are apparently giving buyers greater bargaining power, while increasing interest rates are dampening demand," said OFHEO Chief Economist Patrick Lawler.
OFHEO Housing Price Index Report
HOUSE PRICE APPRECIATION BY STATE (period ending March 31, 2006)
Notice how New York is #21 on the list with modest growth of 1.9% in the past quarter. Now compare that to states with city's that have experienced unsustainable growth over the past year or so (such as Arizona, Florida, & California) where markets in Phoenix, Miami, and Los Angeles are infested with speculative short term investors and new developments! For all you bubble lovers out there you must realize that NYC is a much different animal than housing markets such as Miami, Las Vegas, Los Angeles, & Phoenix!
New York City is made up mostly of Co-op's (aprox. 75% of out total market) which require a strict board process to approve the transaction based on pre-determined financial and debt requirements (read my post, "Why NYC Will Lag in a Slowdown" & "Co-op Board Package"). The lack of speculators in the NYC housing market means less inventory will flood the market in a housing downturn and that more homeowners will choose to live in their investment rather than be forced to sell due to financial crisis. Plus the populaton in NYC continues to grow on this tiny island with limited developable land, driving rental vacancy rates to a 4 year low (0.65% or so). There will always be demand for New York City housing which is why our 'bust cycles' are historically short lived when compared to our 'boom cycles' (as prices drop, someone gobbles it up). I'll see if I can get a chart on this somehwere.
On a side note, Calculated Risk is a great blog hosted by a senior executive, retired from a public company, with a background in investing, finance and economics. It has become a daily read for me and one that you should check out as well to educate yourself on a variety of markets and current events affecting them.
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