Study: Tepid Home Prices May Reflect Waning Interest in New York City
Is living in the New York metropolitan area losing its appeal? It鈥檚 entirely possible, say researchers at Florida Atlantic and Florida International universities who have studied more than 40 years of repeat home sales transactions.
New York City鈥檚 average home price has over the past quarter at an annualized rate of -1.2 percent while the metro area鈥檚 values over the past year are growing at a sluggish rate of 2.5 percent, according to economist , Ph.D., and , D.B.A., both of 抖M女仆鈥檚 , and , Ph.D., of FIU.
Homes in the New York metro area have appreciated in value at just below 6 percent for the past 44 years, the researchers noted. For purposes of the study, they used the for New York City 鈥 the nation鈥檚 largest metro area. 听听听
Record-low mortgage rates and a shortage of available homes for sale or rent are driving prices well above their long-term trends in despite the COVID-19 pandemic. But in New York City鈥檚 metro area, the average property price is only 1 percent above its long-term trend.
Johnson said he is concerned that home values there remain so tepid.
鈥淭his might be the beginning of a fundamental shift, with weather, taxes, COVID-19, history of terrorist attacks and current civil unrest conspiring to make metro New York City a less desirable place to live,鈥 he said. 鈥淓ssentially, we could be seeing a structural break in the demand for homeownership in the nation鈥檚 largest metro area.聽It could be that this is the straw that has finally broken the back of the metro New York housing market.鈥
The researchers noted that the Federal Reserve eventually will end its open market operations, signaling a rise in mortgage rates.
鈥淎s it stands that could be a major drag on New York home prices over the long term, making it very hard for the area to recover,鈥 Gravatt said.
Still, the New York City metro area remains the U.S. center of business and culture, and it would take a lot for the metro area to lose that distinction, according to Beracha.
鈥淭his could be just a temporary downturn, and New York City will rebound like it has so many times before,鈥 he said. 鈥淏ut this flattening of prices, given the performance of other housing markets around the country, is a major surprise and definitely bears watching.鈥
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