“In many ways, it’s going to be a healthier market. It will be more affordable to more people, which is more sustainable. A lot of money was made during the boom years, but I don’t know if it’s such a great world when people with good jobs and a good income can’t buy a home. I don’t think we’re going back there for a while.”
Hall Willkie, President of Brown Harris Stevens
Written by Stefanie Marty
It has been one year since the Lehman Brothers collapse on September 15th of 2008, which was a dark moment for markets all over the globe. I found some interesting articles on how the real estate market has developed over the last year and what we have learned by the collapse.
The last winter was a really bad one for the real estate market when activity was almost frozen. Also the spring season was rather slow and it took until the summer when sales started to stabilize again. Now the question is: What is the fall going to bring about? As of right now the market seems to behave normally and the seasonal expectations, which were characteristic over the last years in fall, are met. People are optimistic that the real estate market goes in a better direction again.
The three things that are important factors in the housing market are prices, transaction activity and inventory. It seems like the last two are getting were they are supposed to be. Activity is going up while inventory is stabilizing. The only thing of concern is the dropping prices. The median asking price for the new listings in Manhattan on September 13th of this year was $860,750 compared to the $1,100,000 of last year.
Some housing prices dropped more than 40 percent and many people have lost all of the equity in their houses. Neither high nor low housing prices are favorable. In the first case no one can afford to buy a house, in the second case homeowners and banks have lost all their net worth. Thus stabilization in prices is important.
People have to realize that a house is just a home and nothing else. It is not a source of cash or any retirement plan. The developments in the housing market over the last year made many people feel poorer even though they are employed and do not need to move. A house is nothing to make money in; it is just a long-term financial commitment.