That’s a Lot to Pay for Housing

According to this press release, people in NYC are spending about three quarters of their income on housing. I keep hearing how cheap other parts of the country are relative to NYC and it’s surrounding ‘burbs and sometimes I’m tempted to pack up the family and head south, or to the mid-west, or anywhere else where the cost of living isn’t ridiculous. I would imagine that other people have considered the same and believe that individual decisions by people in NY and NJ to move puts a cap on house price appreciation at some point. In other words, if housing gets too expensive in New Jersey, other parts of the country start to look very attractive.

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"The Nassau-Suffolk county region on Long Island is ranked by several economists as being second only to Boston as being at risk for price declines as the housing price boom cools down," said ForeclosureS.com (www.foreclosures.com) president, Alexis McGee. She went on to say that median home prices in Nassau County had reached more than $450,000 and in the five boroughs of New York City, median prices had climbed to more than $428,000. She added that when the down payment is factored in, 49% of incomes on Long Island were going to housing expense, while in New York City, the number was 74%. According to building industry and real estate consultant John Burns of Irvine CA.

"With prices and incomes so far out of whack," said Ms. McGee, "prices are much more likely to come down before incomes can catch up. That can lead to a rise in mortgage defaults, especially among homeowners that are over-leveraged with consumer debt on top of big mortgages." She pointed out that, while there was no national housing bubble, there were "bubblettes" in markets where price declines were probable in the near and intermediate future. She added, "Price adjustments have already begun in overheated coastal markets, but we're not seeing a housing crash. Instead, we're seeing a gradual return to realistic price levels. That's a good thing."

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