Quote:
Originally Posted by Tungsten_Udder
"Buy Low, Sell High" is advice that never goes out of fashion.
The trouble with New Jersey (and the metro New York City area) is that unlike most other places in the US at the moment, we haven't gotten to a point yet where we can buy very low. This area has decided to "hold" rather than come down much.
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I know New York is the center of the universe to people who live there but South Jersey doesn't have much to do with the New York market.
A lot of sub-markets in the NYC metro were over priced and they will correct. Housing price to income ratios vary from town to town but in northeastern New Jersey it's around 50-55%. In southwestern New Jersey it's 30-35%.
The Philadelphia economy, by almost any measure, has plodded along at 2-3% growth for the last 20-25 years. We don't have big ups and we don't have big downs. Not saying that we're not already feeling the effects but if you look at most of our major employers, people aren't going to stop using the phone, they're not going to stop going to school, they're not going to stop getting sick, they're not going to stop watching TV, the military isn't going to stop buying new missiles, etc, etc.
The market here may well go down some more. I don't expect a crash here. Especially not in a place like Collingswood. I think it's worth it to buy a house that you like. Even if the house goes down in value by a few points after you buy it, as long as you're in it for the long haul, and it sounds like you are, you'll be fine.
The bottom line for me is my monthly payment. Like I said before, I'd be much more worried about interest rates than I would be about paying $10k too much for a house. If you're getting a 6% rate, assuming you're borrowing $200k, then paying an extra $10k is going to cost you an extra $59 a month on a 30-year fixed. Gaining half a point on your interest rate is going to cost you an extra $65 a month.
You also have to balance it all out with rental prices. No one has built apartments in the suburbs around here for years. No one is building
anything in the suburbs now. Houses don't last forever and they become obsolete even faster. So even in a stagnant economy with low to zero population growth a metro area like Philadelphia would need to add a few hundred
new houses per year and rehab a few hundred more every year just to stay on top of all the housing units that come out of circulation every year.
FYI - that's the big problem with big markets like Boston, DC, LA, San Francisco, New York, etc. is that there is a real shortage of housing and in addition there are restrictions on the supply. In the case of LA you have a lot of steep slopes that aren't safe to build on. In San Francsico you have wilderness areas that are off limits to development. And in almost all of them you have development that's gotten about as far as people are willing to drive to where the jobs are.
But the big problem is all of the artificial restrictions on supply. In Red Bank a developer is having a real hard time building a 10-story building across the street from the train station (meanwhile there are much taller buildings a block away) because people in town object to the density. Same problem at the Hamilton train station. A metro of 20 million people where everyone lives on a 1/4 acre or more isn't possible or practical yet everyone jumps up and down about how high their taxes are or how expensive housing is.
When you limit supply - prices go up.
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