For a while, even as the rest of the housing market sputtered, the luxury sector had looked strong, wealthy home buyers packing cash were largely unaffected by the mortgage meltdown and foreign buyers, for a time, were still buying. Now…not so much, foreign buyers have lost interest, according to Barron’s, and “big stock-market losses, a sagging economy and massive layoffs in financial services are sorely affecting the liquidity, wealth and confidence of potential buyers of high-end homes.”
Those still in the market for a fancy house can find some huge discounts. ...
Because of the troubles on Wall Street and in the finance sector, the worst-off areas in coming months are likely to be Manhattan and surrounding suburbs...
All told, luxury-home prices in and around Manhattan could drop by as much as 20% to 25% over the next 12 to 15 months...
Thursday, December 04, 2008
NYC luxury housing market starting to experience problems
There's nothing like a financial crisis to ruin the New York City luxury housing market:
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For a while , people were talking about how Manhattan real estate avoided the financial storm. Most of the property was absorbed by Europeans when the American dollar and economy fell. Now with a global financial crisis, there isn't anyone who can prop up these prices.
ReplyDeleteMore than that the manhattanites are losing their jobs big time. Even if the dollar remained in the gutter, you had too many losing their job, and not enough new jobs to absorb it.
ReplyDeleteSubstitution effect (it works both ways) will help support prices, Manhattan is still one of the most desirable places to live. However, you cant just get rid of thousands of financial jobs and not expect there to be a decent sized drop in the housing market
Even Suze Orman said over 1 year ago that Manhattan prices would fall, because the financial sector was in distress. She doesn't have a crystal ball, nor do I, but it was obvious that it would. And it is probably not falling as fast as it should because bonus season survived one more year, courtesy of the taxpayers.
ReplyDeleteAs much as foreign buyers want to buy in Manhattan, they want to buy in Paris and London, both bubblicious, with London particularly so. Both London and New York prospered from an unprecedented growth of the financial services sector. With the contraction, both RE markets are in for a fall and will remain depressed in real terms, unless a the financial sector makes as many people as rich as it did the past few years.