In walking the streets of Queens, you can find yourself surrounded by a new investment craze. The operative word here is craze. This week we center on the real estate industry. Real estate always has been considered a sound investment, especially in the ever-growing Borough of Queens.
With the stock market bust and the present bear market, investors have been searching for an alternative solution. Precious metal values are now just moving sideways after the recent push upward centered on gold prices. And with interest rates in the toilet (if you are lucky you may earn a whopping 1 percent to 2 percent on your money), real estate is the star of the day.
With mortgage interest rates at their lowest in more than 40 years, real estate has become quite attractive. But trees do not grow to the sky and if the stock market taught us anything it is that nothing goes up forever. In the Queens Botanical area of Flushing, for example, two-bedroom attached houses are selling from $388,000 to $400,000. It makes you wonder what a three-bedroom house would cost.
To gain more insight on this market I spoke with the very experienced Linda Deangelis of Carlin Properties in Flushing. I wanted to know who is buying and who is not. How are first-time buyers coping with the skyrocketing real estate market? How is the inventory ratio in Queens? And, of course, the big question is: Just how much higher can real estate prices go and what are the signs of a correction in prices?
You might find it interesting that even at these inflated prices young couples are in the thick of this market with good old-fashioned help from their parents. Young couples looking to take advantage of these real low mortgage interest rates are considering a $300,000 mortgage at about $2,400 a month.
Putting that together with the strategy of tax deductions and, I hope, the buildup of future equity, young couples continue to make a calculated move in their purchase of a home. Inventory, no matter where in Queens, remains a sellers market since house listings continue to remain at a premium.
The belief on the street still is that real estate is the most solid investment. But could prices be corrected? They most certainly can. Even real estate is not exempt. A rise in interest rates would start a mild correction, but a sharp correction could be set off by high fuel prices and an all-out war in the Middle East.
Joe Palumbo is a private asset manager as well as the fund manager for The Palco Group, Inc., an investment company at www.palcogroup.com or 461-8317.
©2002 Community News Group
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