The real estate industry faced severe challenges in 2008 with the financial crisis in America. Many people lost their homes being unable to pay the mortgage payments. Businesses incurred losses as the prices of houses plummeted down. However in 2010 and 2011 the real estate market has been picking up in the region though at a slow pace (Taylor, 8). The states of New York and New Jersey have been lagging behind in the real estate recovery. Slow growth has been predicted for 2011 for Northern and Central Jersey (Benziga, 11). Due to job cuts and the reorganization of financial firms, there has been a lower demand for commercial real estate. These states are lagging behind the other states in terms of economic recovery. Overall the economy has been showing positive signs and the real estate market is bound to improve.
The Wall Street impacts the real estate market greatly in New York. There is a linear relationship between the economy of New York and Wall Street. When Wall Street is performing well, the economy also picks up. When the stock prices rise, the prices of the real estate also rise. Currently, the Wall Street bonuses, jobs and profits have been increasing. The bonuses paid to the New York security employees was down by 8% compared to 2011. This is because the profits were shared among more workers than 2009. Compensation level for workers was more in 2010 than 2009. Very high profits were made in the broker and dealer transactions conducted in 2010. The effects of the crisis are still being felt and the industry is still recovering. Before the financial crisis tax from personal and business income from Wall Street used to be about 20% but now it is at 13%. Between august 2010 and December 2010 the securities firms added over 3,500 jobs (Here is the City News, 2).
This is a good sign considering that during the crisis many people lost their jobs. During the financial crisis, there were over 30,000 jobs lost. In New York, there are foreign buyers who have been coming into the area to buy those properties with low prices. The sale of these properties will increase the sale of property houses for now. Foreign buyers are finding the low prices quite attractive. They have been energizing the market of Manhattan. Most of the investors are South Americans. They are now more than the people from Middle East and Russia (Brass, 2010). The percentage of foreign buyers of real estate in the New York is usually between 12-16% of the market buyers. These buyers are having an impact aiding the investors to sell more apartment units economic struggles of the last eighteen months.
The government in 2008 created a tax credit to aid in housing and economic recovery. The tax credit applies only to first-time homebuyers. These are people who in the last three years have not owned a primary home. The tax credit is 10% of the house cost though to a maximum of $7,500. This tax credit has not helped the area of Manhattan at all. First of all there are not many homes in the area that cost $75,000. For an individual the income should not be more than $75,000 while for a couple the income should not be more than $150,000. This is a limiting factor to Manhattan residents since the average income in the area is at least three times the national average. The average income in Manhattan is more than $150,000 for individuals (Hall, 2008). This tax credit can be claimed by persons who bought single-family homes from the beginning of April 2008 to the beginning of July 2009. Unfortunately the area residents cannot participate much in the claims since most homes in the area are condos and multi-family apartments. The impact of the first-time home buyer tax credit has not helped push up the prices of real estate in the area at all.
Conclusion
The economic crisis of 2008 had a big negative impact on the housing sector with many homeowners defaulting on their home credits. The past year has however witnessed a turnaround in the fortune of homeowners in New York and other states surrounding it. The current growth in the fortune of Wall Street has continued to generate a positive impact on the housing sector, even though this has occurred on a gradual scale. This has also led to a property boom which has also witnessed the entry of foreign buyers.
Works Cited:
Benziga Editors. Northern and Central New Jersey Commercial Real Estate Markets in Slow Recovery. Benziga. 2011, Web.
Brass, Kevin. New Foreign buyers in New York City. International Property Journal. October 12, 2010. Web.
Hall, Mitchel. First time buyer credit-not in Manhattan. August 20, 2008. Accessed on 9th March, 2011. Web.
Here is the City News . An Analysis of 2010 Wall Street Bonuses, Jobs & Profits. 2011. Accessed on 9th February, 2011. Web
Taylor, Tracey. Recovery? Yes, a Little. The New York Times. Web. 4th March, 2010. Accessed on 9th February, 2011. Web
