The Big Apple may be the best pick for someone looking for a good investment by buying a home, but at its core, the housing market is ailing.
That’s according to a newly-released WalletHub study that looks at the health of the housing market across 25 major American cities. For as robust as New York’s prices are, things aren’t all coming up roses.
“New York has a lot of problems,” Jill Gonzalez, WalletHub’s spokesperson tells us. Among them? Easy mortgages, or ones where buyers don’t have to prove income or any financial assets, “could lead to bursting the housing bubble like we saw in 2008.”
The study also finds that around 20 percent of New York’s mortgages are easy ones, making New York overshadowed only by Orlando and Tampa in terms of quantity. “They set households up for failure in the long run,” she explains, by creating a housing bubble not unlike the one that burst in 2008.
The report analyzes data from the U.S. Census-backed American Housing Survey, looking at several factors, from a city’s equity value (New York’s is 47 percent; the national average hovers at 30 percent) to first-time home-buyer assistance (Austin ranks first; New York lagged behind in 20th place).
And sure, while New York is number one in equity, there are more pieces in this real estate puzzle. “To really see the pulse of the housing market in a city, you need to see more than how many people have their mortgages paid off,” Gonzalez says. “How long is it typically taking to pay off your mortgage and get to financial freedom?”
For instance, NYC ranks third for precarious mortgages (or homes with 0 to 10 percent equity) after northern New Jersey and Boston, and ranks 15 out of 25 for average mortgage cost for a first-time buyer.
So if New York’s not overall top dog, which city is?
That prize goes to Boston, which ranked first overall and second for home equity, and has the distinct pleasure of the lowest interest rates on a mortgage, at 4.23 percent.
“Clearly, Boston is doing something right,” Gonzalez says. “It’s a city with great real estate but as far as (New York’s) crazy flipping market, Boston really just doesn’t have that.”
But for Jonathan Miller, CEO and president of Miller Samuel, a real estate appraisal firm, some of these numbers just don't make sense. Take that stat about easy mortgages, for instance. “There is just no way that 19 percent of all mortgages were liar loans,” he tells us. “It might be .8 percent or .1 percent. But it just doesn’t exist [much] in this market.”
Miller says the numbers used in the study – and especially the data for a city as big as New York – are simply too reductive and are hard to qualify outside of the fact that New York is a cost-prohibitive place for first-time buyers. “What’s so tough about characterizing the largest city in the U.S. in one brushstroke is that each of the boroughs is performing very differently and vary greatly in their housing stock,” he says.
“When you combine all that into one result, it’s so diluted that it’s really not meaningful.”