Housing Prices - Food for Thought...

Housing Prices - Food for Thought

 

Home Price declines are very rare. In fact, the National median home price has not declined since the Great Depression of the 1930’s. Stock market collapses, the OPEC oil crunch, economic recessions, and even wars have not negatively impacted national home prices since the 1930’s.

 

There have been few times when local prices declined.  In nearly all the cases, the price declines were accompanied by sharp prolonged job losses.  It is difficult to foresee a price decline in a job creating economy.

 

Home prices in our Central New York region have risen at a strong pace in recent years.  There is little concern about a price bubble or a large price correction given the highly affordable condition in the region.

 

Local job growth has been on recovery with steadily improving figures.  But the three year job growth of 0.6% is still below the National growth rate.  Nonetheless, the local unemployment rate of 4.9% in the first quarter implies near full employment in the region.

 

What are the downside risks? High oil prices have raised inflation and slowed economic growth.  The upstate New York economies generally tend to suffer more that the rest of the country during a recession due to a higher concentration of manufacturing industries in the region.  Therefore, should the national economy tip into a recession, job cuts in the local region are likely and could even be severe.  Home prices could be dragged down as a result.

 

More likely scenario is that the central New York housing growth will continue at a slower rate than in recent previous years and we will for all intensive purposes still have a growth year in our Central N.Y. market for 2007.

Comments

[costa.rica.guy]

If oil prices triggers a domino effect on the cost of almost everything including real estate then we can expect a down trending of the prices in the real estate market in next few years. That is if countries will finally pass the law on "Alternative Fuels" which now being adopted in some Asian counties. The "Clean Air Act" is seen to boost the use of the alternative fuel for cars, power plants etc. which will greatly reduced our dependence in crude oil.

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