The Fed on NYC RE

"New York Fed Chief Says The Economy Is Garbage, And That There Won't Be A Jobs Recovery For Years" "Regional Housing Trends: Focus on New York City I'll end with a few remarks about New York City's housing market—a very large market that stands out as unique in many respects. Let me remind you of some of these key differences: * Compared with the rest of the region, and with the rest of the... [more]

"New York Fed Chief Says The Economy Is Garbage, And That There Won't Be A Jobs Recovery For Years" "Regional Housing Trends: Focus on New York City I'll end with a few remarks about New York City's housing market—a very large market that stands out as unique in many respects. Let me remind you of some of these key differences: * Compared with the rest of the region, and with the rest of the country, New York City has an exceptionally large share of rental housing: 67 percent of homes citywide versus 33 percent for the United States. * The market is dominated by multi-family structures, especially in Manhattan and the Bronx. When these units are owner-occupied, they are more likely to be co-ops than condominiums, and, thus, to have comparatively low leverage rates. * New York City has very high housing prices and long construction lags. Since the number of homes cannot adjust quickly, rising demand during a boom typically leads to rapid rises in prices and unregulated rents. Eventually, of course, the amount of housing supplied responds to changes in demand. So, how did the economic expansion and contraction affect New York City's housing market? For a mature city, the city saw an unusually strong boom in housing sales, construction and prices. This expansion actually began in 1996 and continued even in the aftermath of the 9/11 attack. Since 2007, however, New York City's market has turned down. This decline started later than the nation's and prices have fallen less sharply. Now, prices appear to have stabilized. This pattern can also be seen in Manhattan's rental market. After a long period of rising rents, the market weakened substantially from 2007 to 2009, and rents have rebounded moderately in 2010. New York City has not been spared from the high rates of mortgage delinquencies characteristic of this recession. Manhattan's delinquency rates are elevated although they remain markedly below the national average. By contrast, pockets of distress are much more prevalent in the outer boroughs, all of which have delinquency rates, per owner-occupied unit, above the national average. The relatively mild recession and the recovery in the City are lending support to both home prices and sales. Also positive, compared with the rest of the country, are the City's low mortgage leverage rates and a low share of homes with underwater mortgages. Nevertheless, several risks to home prices in the City remain. These risks include the ongoing completion of a considerable number of new apartment buildings—ones that were started at the end of the boom. Another risk comes from the slow pace of job growth in high-pay sectors (including the securities industry) in New York City. Finally, during the boom, prices rose substantially faster than rents. Going forward, this disparity could exert downward pressure on home prices as renting has become a more affordable alternative." http://www.businessinsider.com/dudley-speech-2010-10 [less]