From yesterday’s Times:
While much of the country has been worrying about foreclosures on subprime mortgages, researchers the Furman Center for Real Estate and Urban Policy at New York University found last month that only a tiny fraction of Manhattan apartments, eight-tenths of 1 percent, were bought with subprime loans last year.
One percent. I’m sorry, I mean, eight-tenths of 1 percent.
I have no idea what percentage of Boston homebuyers have used “subprime” loans over the last one, three, or five years (nor is it clear what the researchers mean when they say “subprime” – second loans at adjustable rates?, loans over 80% of purchase price?). I’m going to guess it’s a bit more than 8/10’s of a percentage point.
Also, it’s not a cause-effect sort of thing, as far as I can figure. It’s not that a large number of subprime loans are what is the difference between a “hot” real estate market and a “cool” real estate market. For example, Miami and Las Vegas (and Phoenix) are in trouble because of overbuilding, and much of Ohio and Michigan are in trouble because of hundreds of thousands of job losses.
There is one similarity between the Manhattan and (downtown) Boston real estate market, however.
The pair cited figures showing an expanding base of wealth in New York City: the wealthiest 20 percent of Manhattan residents “the ones who can afford to buy high-end apartments at current prices” have a median income of $350,000, or 50 times the income of the bottom 20 percent. And they concluded that home prices are still catching up from the steep declines in the 1990s.
Now, I’m guessing that the wealthiest 20 percent of Boston residents don’t make 50 times the income of the bottom 20 percent, but there is still a wide income gap, obviously.
What is propping up our local real estate market is the relentless demand for high-quality housing within a very small acreage of land.
More: What Market Slump? – By Josh Barbanel, The New York Times
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