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New York Residential Real Estate Echoes 1980s Boom--and Bust
Published: February 04, 2008
New York--Although the average Manhattan home has doubled in value in the past decade, the housing market has begun to affect the Big Apple, reminding some economists of the housing decline that trailed the 1980s real estate boom, The New York Times reports.
Rents in Manhattan decreased last month by more than 7 percent in some areas, according to a report by the Real Estate Group New York.
Some expect the current situation to worsen: James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University--who has tallied the New York City real estate market for years--said housing might be twice as bad as the period after the 1980s “real estate bubble.”
New Jersey housing prices increased 145 percent from 1980 to 1988, then dropped 9 percent by 1992, Hughes said. The New York and Connecticut suburbs show a similar pattern.
Holding on to houses through the downward spiral and upswing almost doubled their value; however, homeowners who bought near the 1988 high point saw large losses if they sold quickly, according to Hughes.
According to the Standard & Poor’s/Case-Shiller Home Price Indices, current prices in the metropolitan New York area declined 4.8 percent during the 12 months ending in November--much better than the 7.8 percent Washington area drop and the 12 percent declines in Miami, San Diego, Las Vegas, Phoenix and Tampa, Fla.
The larger losses are due in part to the fact property values increased more in Sun Belt cities than in New York during the last boom: the opposite of the 1980s, when New York property values rose higher and faster than those in the rest of the U.S. and then fell by a larger amount.
