New York Real Estate | Living Large in the Big City

New York City real estate has long been a barometer for the rest of New York. But now, in the recession, the city is behaving out of character. One day things might look promising; the next, not so good. With the rest of the state looking for guidance, it is easy to see how many realtors are concerned. But the truth is the market is trying to work itself out. It is vulnerable to the economy. It is aggressive in its method. And it will not go away. Gently. So, the big question is when and how the market will recover, not if it will recover.

The biggest contraction in residential construction on record helped builders trim their excess supply even as sales faltered. The number of unsold new houses dropped in March to the lowest level since 2002, according to Commerce figures.

Construction companies continue to feel the pain of having to slash prices to spur demand. D.R. Horton Inc., the largest U.S. homebuilder by market value, on May 5 reported a quarterly loss that exceeded analysts’ estimates as orders plummeted 45 percent from a year earlier.

“Market conditions in the homebuilding industry are still challenging, characterized by rising foreclosures, high inventory levels of both new and existing homes, increasing unemployment, tight credit for homebuyers and eroding consumer confidence,” Chairman Donald Horton said in a statement.

Financing for homeowners also remains scarce, a quarterly survey of banks by the Fed showed. A larger share of lenders tightened terms on residential mortgages compared with the prior survey, the central bank said in the survey released on May 4. At the same time, about 35 percent of domestic respondents saw increased demand for prime mortgages, the first gain in at least two years. 

Home starts have plunged from a peak annual rate of 2.27 million in January 2006, which capped the biggest housing boom in six decades. Falling construction has weighed on economic growth and plunging home prices helped ignite the global credit crisis that exacerbated the economic slump. 

So there you have it, New York's housing market is in flux. But for some savvy investors with the right credit, capital and security, there are plenty of lucrative deals available that can make living large in the big city a hope that's attainable.

Michael Russell writes about a variety of subjects. This article discusses New York real estate. For more information, visit the Real Estate Book.