Real Estate Markets And Their Price Spreads.
The price difference between various real estate markets is what many people try to profit from. I call this the spread. For example, Manhattan residential real estate prices are roughly $1000 a square foot. Downtown Wheaton Ilinois Real Estate and other equivalent outlying urban areas of Manhattan, such as Brooklyn Heights and Park Slope, might be $600 a square foot. That makes the spread between those markets about $400 ($1000 less $600) a square foot.
Bond traders or people that trade stocks look for or observe price spreads. Bond traders refer to the spread in basis point and in yield to maturity. So if a corporate bond yields 8% and an equivalent term US treasury bond yields 6%, then they would say that corporate bonds trade at a spread of 200 basis points or 2% (8% - 6%) to US treasuries.
In people reach out to more far reaching real estate markets in the hope that those markets may mature or improve and that the price may rise closing the spread between that market and another.
Example: Brooklyn Heights versus Downtown Jersey City.
In Brooklyn Heights versus Downtown Jersey City, I observed there to be a significant price spread. The selling price per square foot for housing in some comparable neighborhoods of Brooklyn Heights can be significantly higher than in Downtown Jersey City.
Recently I previewed several properties in Brooklyn Heights selling for about $750 a square. Since Downtown Jersey City is at about $550 per square foot, then this would imply a spread per square foot of $200 ($750 - $550) between Downtown Jersey City and Brooklyn Heights.
I am looking for those spreads to narrow. A lot of development is transpiring in Downtown Jersey City. This will probably keep prices down in the near term (next couple of years) as a lot of inventory comes on the market and requires market absorption. However beyond the next couple of years as, I believe those spreads will narrow.
As larger developers further their projects and advertise their projects on an international level, more attention should be brought to bear on Downtown Jersey City. I speculate that Donald Trump has every intention of marketing his Trump Jersey City beyond the local markets. Plus let’s not forget about the new $130 million dollar international golf course over at Liberty State Park. This is all free advertising on the coat tails of these projects and I further speculate that these projects will bring international attention to Downtown Jersey City.
So expect to see some price spread movements between and the above mentioned markets over the next ten years. Although there is no guarantee that the spreads will narrow, I speculate (based on the above circumstances) that the probabilities point to the spreads narrowing rather than widening.
Link: www.RealEstate-Calc.com
I have twenty years experience in the financial services industry with specific experience in financial statement preparation, risk management, financial modeling of interest rate derivative products, and forecast modeling. My forecast modeling experience would relate to financial statement analysis and new product line optimization Deerfield Ilinois Real Estate.
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New Jersey Mortgage - What To Expect When Buying A Home In New Jersey.
Maybe you’re buying your first home in New Jersey, or perhaps you’re relocating to New Jersey from another state. Either way, it’s important that you educate yourself on New Jersey home loans before shopping for a home and mortgage. This article explains what you’ll need to know before buying a home in New Jersey:
The median price of a home in New Jersey is $170,800. Homes in New Jersey appreciate at rates above the national average. In fact, New Jersey home appreciation rates place them 9th ranked in the nation. Additionally, average interest rates in New Jersey are below the national average. However, the rate of job growth is below the national average.
The price of homes in New Jersey varies widely between zip codes. For example, in Long Beach Island, New Jersey, the median price of a home in the summer of 2005 was $850,000; however, in Wyckoff, New Jersey, the median price of a home was $550,000, and in Parsippany, New Jersey, it was $350,000.
New Jersey state law prohibits home equity lines of credit on primary residences. However, they are allowed on second homes. Additionally, New Jersey law restricts the amount of fees on second mortgages Chicago Ilinois Real Estate.
Currently, New Jersey is in the process of enacting a new home Lawmakers saw this law as necessary after the State Commission of Investigations found that there was significant corruption, “waste, fraud, and abuse” prevalent in new home construction.
Jessica Elliott recommends that you visit Mortgage Lenders Plus.com for more information about New Jersey Mortgage Rates and Loans.
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