My wife and I have contemplated an eventual retirement that would include two homes, one in coastal Carolina and another in New York City, where we both were born and lived for a few years just after we were married in the early 1980s. We loved it. We moved to Connecticut to raise our two children, but in a couple of years, our second will be off to college and we will not be tied to our Connecticut home. We have a place in South Carolina already.
But we can't afford to buy a home in New York. Prices in the city average $1 million. Investors from overseas and unprecedented earnings made
Real estate inventory in New York City has increased 14% in the last month.
on Wall Street have put even the most modest studio apartment beyond our reach. Now, however, with the Wall Street meltdown and all those financial services employees looking for work, prices are starting to erode rapidly. Consider that Lehman Brothers and Merrill Lynch, both vaporized, employed 85,000 people a few weeks ago, mostly in the New York area. Now that the investment banking business in New York is gone, where do all those people find work? Not likely in New York.
In the last four weeks, the supply of Manhattan real estate increased 14.1%, according to UrbanDigs.com, a real estate information service. Prices have held up fairly well, but many high-priced, brand new condo buildings have come on the market in recent months, skewing the price data. But real estate agents in the city are reporting that many folks who put deposits down on those lush buildings are walking away, many without even trying to get back their substantial deposits. Prices will drop across Manhattan in the coming weeks, maybe significantly.
My wife and I are watching the real estate market in New York City as
It is tough to swallow that your home is not worth what you think it is.
carefully as we are the prices in our area of Connecticut. When the value of our primary home intersects with the value of a two-bedroom, two-bath well-located apartment in the city, we will be serious lookers. If we were contemplating a long-planned move to a golf community, we would be approaching it in a similar way.
Your home, like ours, is not worth what you may think it is, but rather what others will pay for it. That seems evident but is tough to swallow. But the comforting reality is that those who own the home you will buy next are in precisely the same situation as you. Essentially, it doesn't really matter when you sell and buy. You will get less for your house but pay less on the other end. Look at it that way, and there really is no bad time to make the move.
Now let's hope that the geniuses in Washington figure out how to deal with the economic mess, and that we can all still afford the taxes and maintenance on our next homes.
