Connect with us

Buzz

What New Yorkers should expect now that Amazon is moving in

Editor

Published

on

[ad_1]







Photo: Lucas Klappas/Flickr

Yesterday, Amazon made it official — they’ve chosen Long Island City (Queens) and Arlington, VA to house their much-coveted HQ2.

And, immediately experts everywhere began to peddle their theories about how Amazon moving in could impact the Long Island City — and larger New York City — housing markets.

“Although it did not choose Newark to host HQ2, Amazon will still impact Jersey City, and the state of New Jersey, both directly and indirectly,” said the Honorable Phil Murphy, Governor of New Jersey, at yesterday’s Jersey City summit for real estate investment as the news broke. Newark, NJ was a finalist.

LIC is one of the city’s hottest neighborhoods, with close proximity to Midtown and relatively affordable housing costs compared to the Manhattan and Brooklyn markets.

Even with the addition of 25,000 workers, the real story seems to me that there is no longer an immediate concern regarding overbuilding in the LIC housing market,” Garrett Derderian, director of data and reporting at Stribling and Associates, tells Livabl. Stribling and Associates is a leading New York brokerage.

The neighborhood is also one of the country’s hottest market, with the most new apartments delivered post-Great Recession. Some 12,500 units in 41 apartment buildings were completed in LIC between 2010 and 2016, according to the listing site RentCafe.

LIC, a former mostly industrial neighborhood, has seen huge amounts of redevelopment and residential real estate investment over the last several years. The area is now a Millennial magnet, boasting a Millennial share of about 42 percent.

Typical rents in LIC and the surrounding neighborhoods currently average around $3,000, compared to $4,200 across the river in Manhattan. Homes sell for an average of $635,000, well below Manhattan’s average of $1.9 million.

LIC rents and home values rose 4.7 percent and 5 percent, respectively, over the last year — without Amazon’s presence.

“While many new employees may want to live in the immediate surrounding area to the Amazon campus, others will want to venture into the other boroughs. This could lead to a trickle-down effect in nearby neighborhoods such as Greenpoint, which is also in the midst of a small construction boom, to more far-reaching areas throughout the city,” says Derderian.

Amazon’s news has many New Yorkers on edge about the market experiencing the so-called “Seattle” effect.

According to a recent article in Forbes magazine, when Amazon first moved in, Seattle wasn’t close to being one of the priciest housing markets. Post-Amazon, at a median home price of $739,600 and median rent of $2,479, it’s now the third-most expensive housing market in the country.

But, Seattle isn’t New York City, and there’s only one Big Apple. The New York City is healthy housing market that has built-in demand supply that is probably sufficient to absorb the bump in demand.

“The main difference between Amazon opening a HQ in LIC versus Seattle, is that there is already a baked-in layer of wealth and demand in the NYC market. The impact here will more likely be felt in a high-growth manner on the retail side, where the number of businesses should surely increase as they will have a greater population to serve, a net-positive for the LIC market,” says Derderian.

Amazon claims HQ2 will bring “at least” 25,000 jobs with an average salary of $100,000 over the next 15 years and generate over $27.5 billion in tax revenue for the city and state over the next 25 years — plus more than $5 billion in investment over the span of 17 years.

In exchange, New York City gave Amazon nearly $3 billion in tax breaks and a boatload of other incentives — including helipads — to open HQ2 in LIC.

[ad_2]

Source link

قالب وردپرس

Buzz

What Is A Housing Bubble? And Are We In One?

Editor

Published

on

By

What is a housing bubble? You’ve undoubtedly heard the term, but what does it actually mean, and is Canada experiencing one? Whether you already own a home, are considering buying one in the near future, or you’re waiting for the right time to sell, here we answer what is a housing bubble, what causes it, and how it may affect you.

What is a Housing Bubble?

A housing bubble happens when the price of homes rises quickly, at an unsustainable rate. Typically, a price-growth rate that’s in the high single-digits is considered to be healthy and sustainable. Under healthy conditions, homeowners continue to earn equity over time, sellers can make a profit on resale, and buyers can still afford to get into the market. This type of price growth can usually be explained by economic factors, such as an employment boom and favourable interest rates.

On the other hand, a housing bubble can happen as a result of non-organic growth. For example, if speculators were flooding the market, buying up homes to take advantage of rapid price growth, with the intention of selling in the near term for a hefty profit. When prices are deemed to have hit a high point, speculators list their properties for sale. This massive influx of listings, coupled with stagnating demand, causes prices to plummet and results in a “housing market crash.”

A housing bubble is a temporary event and prices eventually return to normal levels, when demand rises again and home-buying activity resumes.

What Happens When a Housing Bubble Bursts?

During a housing bubble, homes become overvalued. When the bubble bursts, prices fall. Homeowners who have no intention of selling are unlikely to feel the direct impacts of the bursting bubble. However, these market conditions often indirectly impact other aspects of the economy, so to call homeowners who aren’t selling “free and clear” would be misleading. The ripple effects of a bursting housing bubble would likely touch most of us, in one way or another.

Homebuyers who purchased a home during a housing bubble likely paid considerably more than it is worth. Properties bought by end-users as a residence, with no intention of being sold in the short-term, will eventually rebound closer to “normal” values and at some point, return to positive growth.

A housing bubble poses the biggest risk to home sellers. Those who purchased in the bubble, but now find themselves forced to sell their home, will come up short on resale. They bought the home at a price that exceeds what they can recoup, putting them in the red with no asset to show for it.

For example, someone purchased at peak market prices, but due to circumstances such as a job loss or the inability to carry the costs for any reason, now has no choice but to sell in a down market. The seller still owes money to their mortgage lender on a home that they no longer own.

Are We in a Housing Bubble?

The Canadian housing market took a surprising upward turn during the COVID-19 pandemic, after coming to a grinding halt in mid-March. The slow-down was short-lived, and what followed through the remainder of 2020 was a a spike in demand for homes met by a shortage of supply. With 2021 well underway, there appears to be no end in sight.

There are a number of factors that indicate we’re not experiencing a bubble caused my market speculators, contrary to some media reports.

A recent online survey of RE/MAX brokers and agents in Western Canada, Ontario and Atlantic Canada found that speculators are not a factor in the Canadian real estate market at this time. In fact, more than 96% of RE/MAX brokers and agents supported this finding, confirming that the majority of homebuyers are end-users. Speculators tend to wait out hot markets, buying when prices are down and selling when they’re up again. The short-term investment opportunities they’re generally looking for are hard to find under current market conditions. Bully offers and bidding wars are commonplace, and we continue to see demand outpacing supply with the release of the monthly housing market data. These factors are generally inhospitable to speculators and investors.

For a housing bubble to burst, there needs to be a steep incline in inventory and new listings, and a decline in demand – neither of which is likely to happen any time soon.

Housing Crash 2021? It’s Highly Unlikely.

The Canadian housing market is still feeling the impacts of the pent-up demand from 2017, when the government introduced the foreign buyer tax and the mortgage stress test as a means to cool the overheating market. These policies prompted many homebuyers to move to the sidelines, opting to wait and save, with plans to re-engage in the housing market in a few years.

Now fast-forward a few years to 2020. COVID-19 had a similar impact on the market, whereby many homebuyers delayed their purchase plans due to pandemic-related uncertainties. That pre-existing pent-up demand for homes continued to swell. With Canadians subject to stay-at-home orders with nowhere to go and spend their hard-earned money, they collectively saved historically high sums, which was injected back into the housing market once consumer confidence returned. The spending came in the form of record-high home sales and for those who were unwilling to face the competitive resale market conditions, renovations to existing dwellings. In fact, Canadian real estate was said to be the driving force behind the Canadian economy in 2020.

Savings, low interest rates and low inventory continue to put pressure on the housing market.

Now, consider the housing needs of the 1.2 million people who are expected to immigrate to Canada through 2023, per the government’s 2021-2023 Immigration Levels Plan.

Given all this, it’s highly unlikely that we’ll experience the influx of real estate listings needed for a housing market crash – and if we did see those listings suddenly come on stream, there should be plenty of buyers to absorb them.

Homebuyers and Sellers, Do Your Due Diligence

Challenging market conditions and a still-present global pandemic have added some personal risk on the part of homebuyers and sellers. It’s important to remember that conditions vary across Canada, and can be dramatically different between provinces, cities, and even from one neighbourhood to the next. Now more than ever, it’s important to work with a trusted, experienced professional Realtor who can guide you though the buying and selling process.

Continue Reading

Buzz

CIBC poll shows majority of homeowners have no plans to sell amid a tight housing market and low rate environment

Editor

Published

on

By

TORONTO, April 21, 2021 /CNW/ – As supply remains tight in key regions of the Canadian housing market, a recent CIBC survey finds that most homeowners say the pandemic has not changed their intentions of staying put, with many choosing to use their accumulated savings to renovate their current property rather than list it.

With only six per cent of homeowners polled saying they planned to sell pre-pandemic, the majority (77 per cent) say the pandemic has not impacted their housing plans. Most (63 per cent) agree that low interest rates haven’t motivated them to sell and upgrade to a bigger home either.

Many homeowners (34 per cent) have renovated their homes over the past year, while a similar number (31 per cent) say they plan to make upgrades in the next twelve months. Of those who have renovated, most (71 per cent) funded this with savings.

“As a potential homebuyer, these results suggest that supply won’t be improving in the near term, which makes it essential to understand what you can comfortably afford within your budget, and work with an advisor before you start looking at homes to have appropriate financing options in place,” says Carissa Lucreziano, Vice-President, CIBC Financial and Investment Advice.

“It’s a positive sign that many homeowners are using cash versus debt to fund renovations – we’re seeing prudent financial behaviour from this group. But whether you’re looking to sell or buy a home, or invest in renovations, these are big decisions that would benefit from the advice of a financial expert.”

Renters continue to be outpriced
For renters, the story has also been more of the same. Half (47 per cent) say they are still unable to own a home due to housing prices, with 34 per cent citing an inability to save for a down payment as the major hurdle. Many (66 per cent) say low interest rates due to COVID-19 have not motivated them to look at purchasing a home with the majority (91 per cent) saying the pandemic has not impacted their ability to pay rent.

Of those who co-habit with family or others, 46 per cent have no immediate plans of moving out, but close to a third (32 per cent) are saving for a down payment.

A lack of knowledge when it comes to purchasing a home may be contributing to the hesitancy of some potential homebuyers:  Four-in-ten (41 per cent) of all the respondents admit they need help understanding all of the costs associated with home purchasing, and a similar number (37 per cent) need guidance on  obtaining a mortgage in the current environment. A quarter of Canadians (27 per cent) say the fear of a recession/economic uncertainty is impacting their decision to buy or sell a home and 31 per cent claim they will only be able to afford a home with an inheritance or gift from their family.

“It appears for those looking to get into the housing market, financing and a lack of understanding remains an issue. With the help of an advisor, you can get an assessment of your financial capacity for a clear picture of what you can afford as a new homebuyer to achieve the ambition of homeownership,” added Ms. Lucreziano.

Continue Reading

Buzz

The Rule Of 3 When Buying A Home (VIDEO)

Editor

Published

on

By

When it comes to buying a home, there are many factors to consider and the decision is likely not going to be an easy one.

In this episode of All Things Money (ATM), host Nicole Victoria provides her advice for being successful with regards to purchasing a property.

One major component the Money Coach highlights is the importance of separating what is nice to have against what is a must-have.

In order to help navigate the tradeoffs, Victoria utilizes a rule-of-three system, using the factors of price, size and style, and location where “what the rule says is that you get to be sticky on two out of those three things.”

For more on this and other money-related tips and advice, check out the full ATM series here.

Continue Reading

Chat

Trending