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The causes of increased land-values in and around a large metro area are pretty obvious, I'm not suggesting that land in Manhattan should cost the same as land in Iowa. I am suggesting that the land-values are out of whack in some areas, for example much of the Northeast.
i won't speak for other parts of the northeast, but NJ has a couple things going for it that keeps land values and home prices up:
1. coastal property. there's only so much beach property in the world. many people in NJ aren't giving up their properties, and just look at what people can fetch for summer rentals.
2. properties within a 60 minute commute to NYC are almost perpetually in high demand. again, if you have trouble selling for some reason, you can often rent it out.
3. not sure about south jersey as much. they don't benefit from the public transportation infrastructure, and although Philly has done well, i'm not tied into their job market right now. but there's jobs in NJ also.
maybe they are out of whack, but really, seems like most parts of jersey are still holding up pretty well.
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Originally Posted by user_id
Solid demand? Not even close. Not only are sales rather anemic, but demand is being stimulating by the government. The numbers just don't add up, incomes just don't support current land evaluations in high valued metro areas.
Real estate prices are set on the margins, hence a situation in which you have low demand and few sellers can maintain current evaluations...at least for awhile. The fact that middle-class and upper middle-class communities have largely weather the storm so far should be suspected, unemployment in these communities is modest and they have the ability to hold out longer. This says nothing about the longer term dynamics in these communities.
High-priced communities throughout the country have the same sorts of dynamics, they are in or around older metro areas and are boomer dominated. They are the result of a generational real estate bubble 2-3 decades in the making. The youth in these communities that are following the lead of their parents are indeed slitting their wrists.
Anyhow, the OP is in Texas and these issues don't apply, but the fact that states like Texas have been a magnet for young middle-class families tells you a lot about the future of the high-priced boomer dominated communities on the West and Northeast.
i dunno, the block i purchased my home on a year ago, on my street alone, has a couple that is a couple years older than me, no children yet; my neighbor is 10 years older than me, with a 9 year old daughter. 2 doors down is a couple in their 40s, with teenages. 2 doors up is a family with 2 kids under 13. i've got a decent amount of families in their 30s-40s surrounding me. with a couple people who have lived on the block for 50 years. there's a lot of towns in NJ with young families. sorry, my eyes are telling me a different story. it might be true for the northeast as a whole, but NYC metro area has a lot of young professionals and a lot of young families in the surrounding areas. jeez. just look at Hoboken and Jersey City in the past decade. the entire "gold coast" as it's referred to, is full of young yuppie families. we'll see. maybe we'll all lose our jobs one day when NYC falls under water, but i think we've got time.
1. coastal property. there's only so much beach property in the world. many people in NJ aren't giving up their properties, and just look at what people can fetch for summer rentals.
They aren't? Are they going to create tombs out of them? Again, the generational aspect of this, those homes are largely owned by boomers who collectively just passed their peak earning/spending years.
2. properties within a 60 minute commute to NYC are almost perpetually in high demand. again, if you have trouble selling for some reason, you can often rent it out.
I really don't know how you are using the phrase "high demand", you can't talk about demand without talking about prices. How exactly is there high demand at current evaluations when sales are in fact anemic?
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Originally Posted by bradykp
maybe they are out of whack, but really, seems like most parts of jersey are still holding up pretty well.
Right, and as stated, this is perfectly consistent with what I'm saying, in fact its what you'd expect. The boomers are just now exiting their peak years. The transition from net accumulators to net spenders is just starting.
Quote:
Originally Posted by bradykp
i dunno, the block i purchased my home on a year ago, on my street alone, has a couple that is a couple years older than me, no children yet; my neighbor is 10 years older than me, with a 9 year old daughter. 2 doors down is a couple in their 40s, with teenages. 2 doors up is a family with 2 kids under 13. i've got a decent amount of families in their 30s-40s surrounding me.
When I say "young families" I'm referring to families 30-ish and younger, essentially Gen-Y families. The people you are referring to are Gen-X, this cohort is divided. Some started their lives during the second half of the generational bubble, some towards the end, how they fit into everything depends on when they purchased their first home, etc. Regardless, I'm not suggesting that there aren't any young families in these communities, just that they are generationally lopsided.
Also, its the ownership of the property that matters here, not who is living in it. Hence you'd have to know who is renting vs who owns.
If I recall most people suggest it was "upper middle-class", that is not what I meant by "high end of middle-class", I just meant the higher end of the income scale for what someone in the middle-class would likely receive in the Dallas metro area. Unlike others in this thread, I don't think the middle-class are those that are neither rich or poor. A two-income 30's something middle-class family in the Dallas metro around is likely to make around $100k/year give or take. I mean, just think about some prototypical middle-class careers, the lower end is a good $40k.
well, all i can say is you do not need $500k salary in NY metro area to live middle class lifestyle as i define it. and i don't define middle class as having the luxury to fully fund 4 years of college for kids, buy a new carevery 3-5 years, buy the latest tech gadgets, and spend $10k/yr on vacations. sorry, but those are all more in line with luxuries to me. if not to you, great. enjoy
Middle class to me is eventually owning your own 3 bedroom reasonably sized home and paying off the mortgage over a few decades. Its sending your kids to public school and helping pay for an in-state college. Its driving reliable used cars for 8-10years. Its taking a driving trip to the beach or a national park once a year and maybe going to Europe or Asia once in your life. All of this is extremely doable on less than a 100K income, although you may have to live somewhere other than the NYC or San Fran areas.
Our family lives in the Pacific Northwest, we make around 150K a year. I stay at home with our kids who attend Catholic school, we drive cars that are 9 and 5 years old. We will pay cash for a public university for each of our two kids. We will be able to maintain the same lifestyle when we retire. My husband has a smartphone that his company pays for, I have a regular old cell phone with a tiny plan that we pay for. For my birthday my husband bought me a pair of nice gold earrings. For our anniversary we spend about $100 on a nice dinner and babysitter for the night. We visit family across the country once a year and spend another few days at a national park.
Right, and as stated, this is perfectly consistent with what I'm saying, in fact its what you'd expect. The boomers are just now exiting their peak years. The transition from net accumulators to net spenders is just starting.
When I say "young families" I'm referring to families 30-ish and younger, essentially Gen-Y families. The people you are referring to are Gen-X, this cohort is divided. Some started their lives during the second half of the generational bubble, some towards the end, how they fit into everything depends on when they purchased their first home, etc. Regardless, I'm not suggesting that there aren't any young families in these communities, just that they are generationally lopsided.
Also, its the ownership of the property that matters here, not who is living in it. Hence you'd have to know who is renting vs who owns.
everyone on my block is an owner. no renters. i'm 29 and my wife is almost 30. i'm gen-x. my younger sister is 25, she's gen-y i think. i forget the cutoff. anyways, i disagree with your assessment of NJ based on what I personally witness here. it may apply to other parts of the northeast, but these parts of NJ are doing just fine. the progression often seems to be young couples moving out of NYC into maybe a Hoboken or Jersey City type suburb, spend a few years there, then move again out to the burbs. the recession slowed down some communities from developing new buildings, but a lot of that construction has since continued already.
in short, there's only so much land in NJ, and pretty much all of it is claimed. it's not a bunch of old boomers either.
Upper/high/wealthy class is everyone who makes more money than me
Lower/Poor class is everyone who makes less money than me
I am middle class (or upper-middle class)!
Funny how 90% of people think they are "middle class" or "upper middle class" in America
Upper/high/wealthy class is everyone who makes more money than me
Lower/Poor class is everyone who makes less money than me
I am middle class (or upper-middle class)!
Funny how 90% of people think they are "middle class" or "upper middle class" in America
well, all i can say is you do not need $500k salary in NY metro area to live middle class lifestyle as i define it.
I'm not sure why you are mentioning a $500k salary....
Quote:
Originally Posted by bradykp
anyways, i disagree with your assessment of NJ based on what I personally witness here. it may apply to other parts of the northeast, but these parts of NJ are doing just fine. the progression often seems to be young couples moving out of NYC into maybe a Hoboken or Jersey City type suburb, spend a few years there, then move again out to the burbs.
You can disagree with whatever you wish, but talking about how things are doing today in your part of NJ doesn't address anything I've stated. I'm suggesting that there has been a 3 decade long generationally housing bubble that is now ready to swing the other direction, the effects of the down-swing will be more extreme in areas that are dominated by boomers. Those areas happen to be the Northeast and the West Coast, which are naturally the areas with the most unbalanced real estate prices in the nation.
You seem to think that pointing out that there are some communities within these areas that have more youthful owners is refuting my claim, but it doesn't. My claim is that the ownership is lopsided with the boomers owning a large percentage, not 100%. The neighborhoods with young families are often the cheaper neighborhoods, sadly many of these families financially strap themselves to buy a home with the delusional that the purchase will benefit them and allow them to "climb the property ladder". Its an "investment".
Regardless, people living in states that are rapidly attracting young families have a bunch different experience than the people living in areas filled with rent-seeking boomers. Its hard to achieve a "middle-class" lifestyle when grandpa is stealing twenties out of your pocket everyday....
Quote:
Originally Posted by bradykp
in short, there's only so much land in NJ, and pretty much all of it is claimed. it's not a bunch of old boomers either.
Yeah yeah, they aren't making anymore land, this is the cliched response one always hears when they suggest a bear market in real estate.
Of course its a bunch of boomers, they are the largest cohort and posses a lopsided portion of the nations wealth. But they won't see a lot of it...the barbarians are coming.
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