I don't see myself as an expert in real estate. Generally, I have alway bought high and sold low. However, I have lived through several real estate cycles, and see the current market not boding well long term in center city. When a row house in an alley sells for $200,000, I see trouble coming. Unless the new homeowner is a dedicated urban pioneer with deep pockets, those payments will soon become a bitter commitment. Walking away might be the easiest choice for the newly disillusioned, and the mortgage company will order plywood for the doors and windows.
If the property was purchased as an investment, that $2000 plus rent will have to be collected month in and month out, or plywood will be coming. However, $200K currently floats in the city, with astronomical $500k and $600K in the suburbs. The astronomical prices are being driven by an incredibly short supply. When the supply and choice increase, the frenzy prices will subside...Then reality will return to center city real estate.
In a couple years there may be a glut of available houses for those advocates for affordable housing. If my dire prediction comes true, blight will be the next buzz word.
I’m not a real estate expert either but the term bubble comes to mind.
ReplyDeleteIs there anybody else who is conjuring up the term bubble?
It seems when prices rise sharply many panic and feel if they dont buy now, they will never be able to afford a home. Patience is a real virtue in such matters.
ReplyDeleteThe housing market has gone through several busts in the last decades, always followed by more money pumping,and inflation to attempt to keep prices up.
One day the pumping is going to end and then it may take decades for pieces to recover.
There’s not going to be any buyers with children they plan to send to the Allentown School District.
ReplyDeleteThe Allentown School District is one of the biggest deterrents to moving to Allentown
DeleteReminds me of a house in my Allentown neighborhood during the last real estate bubble in 2006. The modest single sold for a whopping $220,000 in 2006 and the new owners, Latinos from NYC metro, lived in it for about 9 months and disappeared. The house then went to Wells Fargo Bank in 2007, then to HUD and finally sold to the current owners in 2010 for a more realistic price of $130,000. While the house was never boarded up, someone made out (the original seller) and someone lost out (not sure who really).
ReplyDeleteThe losers were the people from NYC who bought too high, and then the US taxpayer (aka you and me) who bailed out the banks for their bad loans.
DeleteYes, growing up as a small boy in Allentown, I always aspired to eventually live in a row house in an alley. About as much as an old silk mill.
ReplyDeleteanon@12:25: The alley houses provided an easier opportunity for home ownership. Living in a loft was a status symbol in large urban areas....no shame in either living option.
ReplyDeleteI’m still waiting for the horde of urban loving millennials about to descend on the NIZ.
ReplyDeletePlease, wake up, folks! This is all part of the bigger plan to bulldoze much of the city and redevelop and modernize it as described years ago in our wonderful (not really) Morning Call. I'm sorry I have no links to the successive articles. (Three if I remember)
ReplyDeleteIf those homes are going for 200 grand I can predict one thing: they will soon be rented to 3 or 4 'families' from some urban area far from the Valley.
ReplyDelete