A leading housing market bear says banks in the New York City area have so far refrained from foreclosing on owners who owe more than their properties are worth. But analyst Keith Jurow doesn’t expect that trend to last much longer.
In fact, writes Jurow:
Within a year, I expect many of the [nation's] weakest markets to show signs of unraveling. Perhaps the most vulnerable market is the entire NYC metro area. Sooner or later, the banks will have to start foreclosing or even doing short sales. When these properties hit the market in significant numbers, I have no doubt that prices in the entire region – where 19 million people reside – will collapse.
New York City, which accounts for 44 percent of the jobs in New York State, gained 181,000 jobs since the recession, almost 41,000 more than it lost. Rochester regained 15,900 of the 19,000 jobs it lost.
While New York City’s suburbs have reported moderate gains, several upstate cities have regained only a portion of the jobs lost during the recession, and some have continued to lose jobs. For example, Syracuse has regained just 6,900 of the 13,700 jobs it lost during the recession while Buffalo has regained 11,900 of the 21,000 jobs lost. Additionally, many of the jobs added during the recovery were in industries that pay less, on average, than those lost during the recession.
And this is consistent with what Nicole Gelinas wrote in the New York Post yesterday about the dichotomy between New York City’s economic recovery and its budget outlook:
Wall Street is still 13,900 jobs short of its 2007 peak; the big employment growth is in other sectors. These are good jobs — but they don’t pay the “luxury city” bonuses needed to feed the city’s budget.
Because of lower bonuses, the average wage earned in the city is 4.7 percent below the 2008 peak (adjusted for inflation). Meanwhile, City Hall spending is up 7.9 percent. We’re like the Wall Streeter whose bonus has plummeted but who can’t rein in his big-wheel spending.