It's only been two years since I left New York. But it's already hard to get into a mindset where a $700,000 two bedroom is a bargain.
Here in DC, despite all the assurances that population pressure would keep prices steady, they're falling, and the newer the gentrification, the faster the decline in market value. Not that you'd necessarily know it from the listings--there are still a lot of flippers who bought at inflated prices two years ago, and can't bring themselves to believe that they are going to have to take a substantial loss on their house even after they put in bamboo floors, mid-range bathroom fixtures, and a whole new countertop. But the days on the market tell the story. A three bedroom house in Bloomingdale is not worth $600,000, no matter how nice the fixtures, unless you assume that the neighborhood will keep gentrifying and you'll see substantial appreciation. And no one is ready to assume that right now. Even if the neighborhood that does keep gentrifying, it's hard to see how recession incomes are going to support a steady upward march.
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