The housing market often takes its lead from the the major businesses in the local market. If employment and compensation is good, housing is helped.
Take Detroit for example. Michigan is one of the most vulnerable housing markets right now as the auto industry has been hemorraging. The decline in housing prices may become excruciatingly painful. [Detroit News] .
Less job certainty, few jobs and little or no increases in annual compensation translate into weaker housing markets. No rocket science here. (for that see Los Alamos ).
The New York region happens to be one of the bright spots in the national economy over the coming year. Wall Street, one of the major “industries” of the region, had a record year for compensation [BW] . Last year firms payed out $21.5 billion in bonus money and this year, based on year to date figures, is expected to be even better. This is measured in bonus money paid out, which exceeds 50% of total compensation. They are not hiring more than any other sector but compensation per person is rising.
This money finds its way into the housing economy within a few months after the bonuses are announced in December. This may temper some of the weakness being caused by the build-up in inventory but its not the answer to all our housing market issues by a long stretch. For example, condo units available for sale are up 143% and co-ops are up 50% since December 2004 [Curbed] .