I want to talk about the real estate market in NYC since I live here. The prices here for a house is ridiculous. My family has been looking for a house for the past several years and every time we wait for a better entry point the real estate market only gets more expensive. We looked at the houses in Brooklyn recently. A one-family house costs around 500K, a two-family house runs north of 700K, and a three-family house easily goes over 900K. We also looked at other boroughs. In Queens, the prices are even more ridiculous, 500K+ for a single-family home. Staten Island has the most affordable houses, but it is also the most inconvenient location for us to get to the center of the city.
Some say there is a real estate bubble and soon it is going to burst. Take a close look at Manhattan. A studio costs 400K, a one-bedroom costs 500K, and a two-bedroom goes for 700K or more. Of course, there are also luxury apartments in uptown that runs in the million’s range. New York City has the most expensive condominiums in the country. Do you think the bubble will burst?
Well, let’s take a look at the laws of supply and demand. If the demand remains to be strong and supply is short, then the price is likely to be pushed up. There are just too many people in NYC; the population has grown significantly over the recent years. And I believe more people are coming to the city — people from other states and immigrants from around the world. Many students graduating from college are looking for jobs in NYC. In my company alone, we hire new graduates every year from outside the city. With increase in population, there will increase demand for housing.
I know interest rates are going up, but it is still relatively low. And people in general have learned to save up for a house. As the interest rates go up, people will use more cash to buy.
Is there a real estate bubble? Well, there is real demand in this market. And from what I’ve seen and heard from real estate agents, people are buying a house to own and live. I would be concerned if everyone is buying a house to flip. That would be a sign when houses are becoming highly speculative. But most people are looking to move to a place they called home and when housing is still a necessity, even if there’s a bubble, the bubble is solid.