Troy
Towers
380 Mountain Rd., Suite 106
Union City, NJ 07087
Phone:
(201) 866-6500
Fax: (201) 430-4844
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What's the scoop on the sub-prime mortgage crisis, and what's its effect on real estate in Hudson County? Almost everyone I run into lately asks me with great concern, "how's the market? How has the national sub-prime mortgage crisis affected pricing and activity here in Hudson County?" Real estate markets, unlike equities and other commodities, are primarily local. They are influenced by the practical and the mundane, the timeless lure of "location," and the lofts and limits of local economy as much as they are by the underlying financial bedrock known as the national lending industry. National press over the past year has reported alarming statistics on American homeowners losing equity in their homes as variable interest rates climbed, making their payments unaffordable. The "sub-prime" market refers to those homeowners who took advantage of low-rate mortgage offerings with little or no money down, making home ownership a reality when conventional standards would have kept them on the sidelines. Lenders sought to make up in quantity what they were missing in quality. When interest rates rose, many buyers froze in fear, causing the housing supply to exceed demand, which drove prices down - dramatically, in states such as Florida, Illinois, and Texas, for example. Already in a bind with higher payments, sub-prime homeowners felt the crunch when prices dropped below the payoff level of their mortgages, and many just walked away, allowing their properties to foreclose. Selected urban and urban-access areas such as New York City and its environs have to some degree bucked this trend, for various reasons. The proliferation of coops in New York City, for example, has shielded the metropolitan area somewhat from the sub-prime crisis due to the strict financial review practiced by most coop Boards. The affluence of Wall Street commuters and the perennial draw of the tightly-packed Big Apple have supported the housing supply in our area, particularly in the upper mid-range of the market, where down payments were more readily available to its more mature clientele. On the lower end of the market, sales have maintained as long as owners were not levereged above the new market value, or were able to withstand a smaller gain than they might have two years ago. In our area, there are exceptions as well as the rule. Over-priced properties are self-correcting. Quality properties set at fair market prices are holding their own. For homeowners looking to make a move, as in any market - "a rising tide floats all boats," and vice-versa. If you are moving within the same market area, when you have to take a loss on your own home sale, your next home will be purchased at a bargain price. Likewise, if you realize a substantial gain on your property, you will likely pay a high price for your next home. Following are some interesting recent articles on how the lending crisis has affected areas in and around Hudson County, including Union City in particular. - Paula Brown, Broker
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If you have any comments or questions about this topic,
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Paula Brown, Broker (201) 866-6500