Sounds incredible, doesn't it! Can there be a place in the U.S where you bought a real estate in the last one year and watched your savings actually grow?
The answer is yes, if you were lucky enough to buy in New York City. While new home sales fell 19% nationwide in the second quarter of 2007 in Manhattan new and existing home sales more than doubled in the same period.
As far as prices go, while the national picture almost reminds people of the Depression, in Manhattan they recorded a double digit increase on average. Property dealers feel that 2007 will probably be their most profitable year.
So what has New York City got right which others have got wrong? New York has Wall Street! Its brokers and fund managers and deal makers are simply flooded with cash.The higher the Dow Jones climbs the more money and bonuses they make. Then naturally they want to make themselves as comfortable as they can.The result is that they are buying better and costlier homes. Then there are a lot of new people moving into the city particularly wealthy foreigners from Europe, Russia, China and India. They find New York cheap compared to other international cities. This feeling is helped by a falling U.S. dollar. Then again steep rentals have prompted temporary residents and frequent visitors to invest in small apartments. Not only have they saved on rent but have made a profit when they moved out!
But will things continue to be so rosy in the future? Not all seem to agree. A stronger dollar or a slump on Wall Street not to mention a terrorist attack could quickly change things.
More worrisome is the ongoing sub prime crisis. Tightening lending standards could drastically cut the flow of new money into the market causing prices to fall. In fact experts do point to a softening in prices of late. But such declines are presently confined to particular segments of the market while luxury homes and condos have suffered somewhat, the price of an average apartment has held rock steady.
With growing indications that Bernanke may ease sooner than later it probably won't be long before the party starts all over again.