On Aug 21, 2007, at 1:22 PM, Jordan Hayes wrote:
> I'm curious what you put in for the values for this 15 year break
> even;
> was it by any chance your very-low-and-rent-controlled apartment? :)
No - market values in Fort Greene, Brooklyn. $2000 rental = $500,000 of house.
> I
> look back at the apartments I rented over the years in Manhattan and
> shake my head: if I had bought any of them at the time, I'd be rich
> today.
Yes, but the past 12 years or so have been an extraordinary boom. As Andrew Beveridge pointed out on my radio show the other week, NYC housing costs are already above the "affordable" level relative to incomes; I doubt prices can double from here, as they did from 2000-2006 (according to the Case-Shiller-Weiss index for the NY metro market). They were up "only" 25% from 1994-2000, and were flat from 1987 (when the series begins) to 1993.
Nationally, for the century before 1995, house prices on Shiller's reckoning only rose about 1% above the rate ofinflation. The curve kinks in 1995, and kinks more sharply around 2001.
There's no reason why, over the long term, house prices should rise faster than incomes, is there?
Doug