New York's luxury real-estate market is crashing


#1

Originally published at: https://boingboing.net/2018/10/10/sic-semper-skyscraper.html


#2

God dammit I hope so. The transformation of housing from shelter to an asset class is one of the most destructive forces of our time. A quote so good I’ve committed it to memory.

Housing is like most other speculative markets, so separate from the experience of the every day person, a collapse would almost benefit us. Their success is our loss, our success is their loss. I hope the ever wealthier capitalist class realize this and capitulate, otherwise class war will be the only solution. The ruling glass realized this during the labor struggles of the early 20th century. They’re probably overmilitarized at this point and won’t have to worry as much, I guess time will tell.

You can’t shoot germs… lol


#3

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#4

The nice thing is, it starts to look like the end game of capitalism. Where you have all the money, but there’s no one left to make things and cook things and do things, and sell them to you. Sort of a trailer for the movie. Maybe you start to realize the people at the bottom matter just as much as you; or maybe you never figure it out.


#5

ya, capitalism is like the grey goo


#6

I’d really like to see a significant tax burden for properties not currently being used as a primary residence.


#7

We saw an interesting HBO flick the other day, Class Divide, about a charter/magnet/private school across from one of NYC’s Projects in the Chelsea area. It also talked about the HighLine park, and how gentrification is chasing anyone who’s not a big investor out of the area by making rent too high for anyone but a millionaire to afford. Of course a millionaire billionaire would buy the property outright, not rent.


#8

The connection between the pricing of these properties and reality is tenuous at best. What we have here is a retraction from “aspirational pricing”. In that market you can shave $10m off a price no problem, because it was pure fantasy to begin with, not the result of cost+“reasonable profit” like any other business. What it means for housing ordinary humans remains to be seen.


#9

com-optimize%20(11)


#10

If only we could separate speculators from the few necessary elements to survival (land, shelter, food, medicine, public transportation, telcoms), but keep a self-contained sandbox for them to play in, or fail in.


#11

What is this like the 10th time Corey has reported a “crash” in the NYC real estate market since 08?

It never impacts rents. And the rate vacant luxary condos are built never slows.


#12

That’s cool but the issue is even with the bubble bursting the real estate that currently is being speculated are luxury spaces. It’s not like middle class or low-income families would ever have access to that real estate, so it’s effectively cordoned off from the people that need it the most in a permanent way unless a lot of those spaces are revamped specifically for that demographic. Same thing in the Bay area and in other cities.


#13

You know, I’m constantly reminded of Soylent Green when thinking about such nearly-gated or really gated communities.

The setting is 2022. Not too much off.


#14

Correct. In NYC, “luxury real estate” in a new building implies prices starting at $4-million for a 2500 sqf+ condo or co-op with concierge services, gym, pool, etc. A bubble or crash in that sector isn’t going to have a lot of ripple effects on the rest of the market there (which is barely affordable to anyone making an upper-middle-class salary)


#15

Exactly. In a way, prices falling on places built just for the luxury market has very little effect on the middle class market. It’s not like they would have built these towers as middle class housing otherwise. An argument could be made in the brownstone neighborhoods where 2-8 unit houses are being bought by the wealthy and returned to their original single family status that it is driving up prices by reducing rental inventory. But in reality rental inventory is way up due to new construction driving down rents in the more plebeian market levels.


#16

Most of those towers were originally built as middle class housing and have been recently converted to luxury housing units. That or warehouses, old commercial space and office space. There are exceptions, but NYC isn’t really into putting in new super highrises anymore.

The average rent in NYC is around $3k/ month for a 1 bedroom/studio. From what I’ve seen rental stocks have gone up slightly. But rents themselves have continued to climb and most of the rentals being added are of the “luxury” sort. More expensive buildings targeted at the upper middle class or better.


#17

Huh? Manhattan is lousy with brand new luxury towers from Tribeca to Hudson Yards to Central Park. What buildings are you talking about, pre-war? Around here in Jersey City rents are soft because thousands of units are hitting the market. I had to lower a unit from $1750 to to $1650 in a gentrifying area because the new rentals are offering free months and other perks to get filled and hit their financial benchmarks for the bankers.


#18

That additional rental inventory will end up driving up rents or keeping them steady, because there’s a qualitative as well as quantitative factor in play in Manhattan and Brooklyn and parts of Queens. That’s because new construction and conversions in the sub-$4-million/luxury range in NYC is still pretty damned expensive and luxury-oriented, whether one is buying or renting. Developers in those areas aren’t building rental units for working or middle-class tenants anymore, only for upper-middle-class and higher ones.

As a result, a new 600-sqf 1-bedroom will likely rent for $4500/month (for a household making ~$180k/year), as opposed to a legacy unit of that size in the same neighbourhood that currently rents for $3000/month (for a household making ~$120k/year). The new market rate resulting from the new construction rentals will provide the landlord of the legacy unit with an excuse to bump up the rental rate to $3800/month over the next four years with no improvements to the unit, which he’ll do in a heartbeat if the city allows him to. Somehow I don’t think the household’s salary will increase by $32k during that same period.


#19

Analysts differ. Unsustainable trends eventually end.

This is what’s going on here, some of the project mentioned below are already hitting the market. 30k units in a city of 250k.


#20

Time for another white flight?