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Housing prices on Long Island, are indeed, out of line with incomes. This is mainly due to the high property taxes. Each $6 monthly of property taxes equates into about $1000 less in borrowing power.
It is true, as prospective first time home buyers we are outraged because costs for the past 6 years simply do not reflect average incomes. Even now as they start to come down, they are still...simply too high.
I think that if we were to buy now it would be like "catching a falling safe". People that are willing to buy at such high and unreasonable prices (mostly by taking out huge mortgages and living a life of serfdom) keep the prices high for the rest of us.
What we would actually get in a home for our 20% downpayment is (presently) laughable and just not worth it.
I feel that if you want to purchase a home, find out what it was worth before the bubble and then adjust is per year based on income growth. C
Scroll down the the "House Appreciation Estimator" and put in the last year the house was sold and the price it was sold at. The estimator calculates a gain of 3-5% per year (average income growth).
PS: The guy who runs the above-referenced website refers to it as "catching a falling knife."
Housing prices on Long Island, are indeed, out of line with incomes. This is mainly due to the high property taxes. Each $6 monthly of property taxes equates into about $1000 less in borrowing power.
So basically a no-win situation. If the taxes were LESS, then homeowners would try and gouge buyers even more to make up for that because theoretically they can "afford" an even more jacked-up mortgage. (To me having to borrow huge amounts of money to put a non-luxury roof over one's head does not equal "power.")
I dont see how property taxes are the reason for high prices of homes.
My point was that you should not have to borrow that type of money in order to live in a moderatehome. Borrowing that much money in order
to afford a home only benefits the lenders, mortgage brokers, and real estate agents and perhaps the lucky few who bought at fair prices and were able to sell and move out of the area
My other point was that if prospective buyers boycott and refuse to buy houses priced at unreasonable costs that do not reflect income levels, then prices would have to be lowered.
I do however feel bad for people that did buy thinking that if they did not, they would be priced out.
I do however feel bad for people that did buy thinking that if they did not, they would be priced out.
If they stay in the house they bought and use it as a home for several years (instead of a "get rich quick scheme") they will be fine and will not lose any money and will make a profit because time marches on and prices go up eventually. It will not be the end of the world if home price gains go back to slow and steady rather than the ridiculous gains flippers were making (which played a large part in driving up the prices to their current unaffordable situation).
If they expected to flip it in 2 years for $100,000 profit, then I don't feel sorry for them at all and they can rot.
If they stay in the house they bought and use it as a home for several years (instead of a "get rich quick scheme") they will be fine and will not lose any money and will make a profit because time marches on and prices go up eventually. It will not be the end of the world if home price gains go back to slow and steady rather than the ridiculous gains flippers were making (which played a large part in driving up the prices to their current unaffordable situation).
If they expected to flip it in 2 years for $100,000 profit, then I don't feel sorry for them at all and they can rot.
I think LI will stay in some level of denial on the whole and drift a bit lower 5-10%, and then stagnate for many years...maybe up to 5, while the norms for this area of the country catch up a bit. Just my two cents.
I dont see how property taxes are the reason for high prices of homes.
I wasn't saying that property taxes are the reason for the high price of homes. I was talking about affordability. When you have property taxes that are 10,000 to 12,000 per year, it makes homes unaffordable for many, even if they were sold at very low prices.
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