The NYC housing bubble.

[IHateMyJob2004]

I hate shows like Selling New York but I watched one episode. The typical drama that teaches you nothing.

But I found an interesting tidbit. There are a lot of skyscrapers going up. And 2000 sqft units are going for $2-$4 million. The prices are totally irrational. We are talking $1000-$2000 per square foot.

Ya, possible I suppose. But here is the kicker. Most of the units (according the realtors on the show) are being sold to foreign investors and not even being lived in or visited. They are totally vacant!

So, is this another bubble that people are in denial about? Or is this just part of limited housing where only the wealthy can afford to live there? My only doubts are based on the fact that these are actually in Manhattan.

 

[Fern]

You want expensive?

Try this: http://www.prestigeproperty.co.uk/pages/paris_apartments_for_sale.asp

The price for luxury units in NYC isn't out of line with other such cities.

Fern

 

[cabri]

Key word in the OP is investors.

They intend on reselling once the supply shrinks - it being vacant keeps it in pristine condition.

 

[JManInPhoenix]

I saw a thing last month on PBS about all the ghost buildings in China that are completely vacant. people are using them for investments only and devoid of any tenants

 

[Insomniator]

I don't see demand in NYC ever shrinking unless the ocean levels rise to submerge the entire island. It may be a 'bubble' but its probably an extremely sturdy one. Small apartments that cost thousands per month and haven't been renovated in 30 years are snatched up rapidly.

 

[Mai72]

The thing about Thailand is you can't be a foreigner and buy property there.

They keep property affordable for the locals. Its not artificially jacked up because of foreign investments.

I've seen Selling New York. That shows glamorizes selling property in NYC. They make it look easy, and anyone can do it. Well, it's not easy. It's difficult work.

 

[Daverino]

High end NYC apartments can be used as basically a money dump. You want to store $20,000,000 of wealth and you don't want to use a bank account? Buy a Manhattan penthouse. It will probably appreciate more in value than a savings account and it's a physical thing.

Hell, Mick Jagger and Nicole Kidman own apartments in the building next to mine. Never seen them a single day because they don't actually live there unless they're spending a few days in NYC.

 

[zephyrprime]

The property bubble in London is worse. This stuff is all a big bubble. It's going to pop someday.

 

[nageov3t]

without even the first 2 new World Trade Centers filling up, the builder is trying to get the state to pay for a 3rd tower. 🙄

 

[fskimospy]

I would be strongly supportive of a tax based on NYC residency. As in, you have to prove NYC primary residency or something to that effect or pay a tax of X% of your property's value each year. If you're going to have global billionaires eating up real estate they can either live here or we can get something out of it.

 

[K1052]

without even the first 2 new World Trade Centers filling up, the builder is trying to get the state to pay for a 3rd tower. 🙄

The Port Authority actually. At least now in the wake of the GWB scandal there is actually a fight inside the PA about putting up the money for the next WTC tower and the agency's mission as a whole (getting out of the real estate development business).

 

[K1052]

I would be strongly supportive of a tax based on NYC residency. As in, you have to prove NYC primary residency or something to that effect or pay a tax of X% of your property's value each year. If you're going to have global billionaires eating up real estate they can either live here or we can get something out of it.

Non-resident occupied units above a certain floating valuation should be subjected to significant additional property tax IMO.

 

[AViking]

Stockholm has the same thing happening. They're convinced it's a stable housing market due to limited supply. A 1000 sq ft 2bd flat with costs over $1 million here.

2000 sq ft places go for $2.4 million.

2800 sq ft for $7 million

 

[BoberFett]

Stockholm has the same thing happening. They're convinced it's a stable housing market due to limited supply. A 1000 sq ft 2bd flat with costs over $1 million here.

2000 sq ft places go for $2.4 million.

2800 sq ft for $7 million

That certainly puts in perspective all that disposable income you say Swedes have over Americans. 😛

 

[AViking]

Well those that sell sure have a lot of disposable income. That's for sure. The issue though is that they think these prices are not a bubble so many are holding them and renting them out.

 

[IHateMyJob2004]

Great, there is another housing bubble. Kiss the world economy good bye.

 

[Subyman]

Key word in the OP is investors.

They intend on reselling once the supply shrinks - it being vacant keeps it in pristine condition.

How does that say anything at all? The last housing bubble was caused by investors. "Investors" bought in, sold to the next line of investors, and the next each making a decent chunk of change until there weren't any more investors to push the value to then the last person holding the house is screwed. Its like hot potato.

What the OP is pointing to is the extreme prices that have to stop moving upwards at some time, especially when the supply isn't shrinking its growing due to new skyscraping going up.

 

[DucatiMonster696]

All bubbles eventually burst. The problem arises when government tries to re-inflate or prevent those bubbles from popping.

 

[Slew Foot]

but its different here

 

[AViking]

but its different here

Of course it is

 

[Darwin333]

I would be strongly supportive of a tax based on NYC residency. As in, you have to prove NYC primary residency or something to that effect or pay a tax of X% of your property's value each year. If you're going to have global billionaires eating up real estate they can either live here or we can get something out of it.

Does NY city not have a property tax already?

 

[Darwin333]

Non-resident occupied units above a certain floating valuation should be subjected to significant additional property tax IMO.

We have that hear, its called property tax exemption. You get $75K deducted off the value of your house if you own it and live in it. So if you own, and live in, a $175K house you are only taxed on $100K. Obviously that would need to be adjusted to individual areas but its easy and fair.

 

[IHateMyJob2004]

How does that say anything at all? The last housing bubble was caused by investors. "Investors" bought in, sold to the next line of investors, and the next each making a decent chunk of change until there weren't any more investors to push the value to then the last person holding the house is screwed. Its like hot potato.

What the OP is pointing to is the extreme prices that have to stop moving upwards at some time, especially when the supply isn't shrinking its growing due to new skyscraping going up.

What you describe is what i call "greater fool theory". People keep investing , if I can call it that, till the greatest fool is found. the greatest fool looses his ass. The fools simply got lucky.

 

[IHateMyJob2004]

All bubbles eventually burst. The problem arises when government tries to re-inflate or prevent those bubbles from popping.

Popping is an overused term. Just say it is called correcting. That's all that is actually happening. Popping makes it sound like something more.

To some extent, the government may need to step in to prevent catastrophic and systemic problems from occurring when a correction eventually does occur. in the USA, we are an Oligopoly, so it is really more of an issue of how many rich people are there that could be hurt. That is what will dictate whether or not the government puppets do anything.

Drunken words:
This new housing bubble though, this thing is going to be horrible. I don't care. My personal house value already took a sh!t. Now it's time for the wealthy to get killed. I can't wait.

 

[berzerker60]

There are huge housing bubbles in a lot of places right now. One of the problems of concentrating wealth in the hands of a few super-investors instead of spread throughout the economy is they're always chasing investments even when there aren't all that many great opportunities, leading to bubble after bubble like this while everyone else gets relatively poorer.