Manhattan apartment rents are sizzling -- bad sign?
Some experts worry that this is just another indication that America's housing market is getting overheated again.
According to Bloomberg, apartment rents in Manhattan rose in March at their fastest rate in six months, climbing 6.7% to an average of $3,195 per month. People who want to become owners are having problems finding properties to buy as the number of apartments for sale in Manhattan plunged 34% in the first quarter, the biggest decline in the more than 12 years that records have been kept, the news service says. Rents in the neighboring borough of Brooklyn have surged 11%.
Housing outside the city that never sleeps is also rising at a torrid rate, with more than a trillion dollars added to the value of single-family homes nationwide. As the Washington Post noted, new housing units under construction is up 28%. The closely watched S&P Case-Shiller home price index, which tracks the 20 largest markets in the U.S., rose 8.1% in January, its biggest year-over-year gain since June 2006. New foreclosure filings in March fell 23% on a year-over-year basis in March, according to RealtyTrac.
All this has some experts, such as Edward Pinto of the American Enterprise Institute, wondering if the U.S. is in the midst of a new housing bubble. He recently argued in the The Wall Street Journal that the rise in housing is more the result of the Federal Reserve keeping interest rates at record lows than an improvement in the market's fundamentals. That won't last.
"Given the continued subpar economic recovery and our past experience with the disastrous impact of loose lending encouraged by federal policies," he wrote, "homeowners would best be cautious about spending their new found 'wealth.'" And good lucking finding an apartment in New York City.
Follow Jonathan Berr on Twitter @jdberr.
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