NYC mayor: housing market "dramatically" slowing Friday 20 January 2006, 1:11pm EST
NEW YORK, Jan 20 (Reuters) - New York City Mayor Michael Bloomberg on Friday said the real estate market was slowing "dramatically" and only a "miracle" could stop soaring mortgage rates from eating into housing prices.
Consumers are definitely feeling the pinch of higher mortgage lending rates and are not quite as eager to snap up a new home especially at time when house prices in the Big Apple are near record-highs, the Republican mayor said in his weekly radio show.
"The real estate market is slowing down dramatically and we're going to have a problem down the road," Bloomberg said.
"If people who want to sell their houses have to wait a longer time before someone comes along and buys it, it would be a miracle if prices didn't start to go down," he said.
The most recent data compiled by Prudential Douglas Elliman show the volume of sales of Manhattan apartments dropped.
The survey also showed the number of for-sale units piled up in the last quarter of 2005, while buyers took longer to commit to a purchase although prices have not yet taken much of a hit as a result.
Bloomberg, who won a second term in office in November by a landslide, said property taxes were on the rise, but were not climbing as fast as the values of the properties themselves, as state laws limit how much taxes can rise.
But homebuyers are not just burdened by higher property prices and taxes, he said.
"Rates for mortgages are 200 basis points higher than a year ago, the cost of heating oil -- we all know has gone up -- and taxes have gone up and expenses have gone up," he said.
The New York State Financial Control Board estimated in December that real property taxes -- the city's biggest and fastest-growing tax -- will produce $12.6 billion in the current fiscal year.
New York State Comptroller Alan Hevesi has estimated New York City could end the current fiscal year with a surplus of almost $3.0 billion, thanks in large part to the housing market.
The city does face budget gaps in the future, and the mayor defended the practice of handing out tickets for nuisance violations as being preferable to a tax increase.
"They (tickets) are a source of revenue to the city and somebody's got to pay the bills," he said.
"It saves us from having to charge more taxes so to say the money isn't useful is ridiculous," he added.
The mayor denied the city had set formal quotas for the number of tickets -- for minor offenses, such as parking -- issued in order to raise revenue collections. Instead, the city has performance targets, he said.
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