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February 21, 2009
Manhattan on Sale
Barron's
by Leslie P. Norton
With all the awful goings-ons in the financial markets this week, what did Barron's choose to put on its cover this week? A report on New York City's teetering luxury real estate market.
First came Miami, Las Vegas and Phoenix. Now Manhattan's high-end housing market is cratering. With Wall Street firms stepping up layoffs, and money for big-ticket mortgages drying up quickly, prices for new york apartments and townhouses of $5 million or more have been falling and may well drop by another 30% before finally bottoming out. That could help turn the Big Apple into the ugliest housing market in America.
While Barron's reported three months ago that the New York luxury market was headed for trouble ("Sand Castles," Nov. 24, 2008), the outlook has become notably worse, with some experts citing the bankruptcy of Lehman Brothers as the breaking point.
The local economy is reeling as the securities industry moves to cut some 46,000 jobs by the summer of 2010. Affluent investors have pulled back from house shopping to nurse wounds inflicted by the stock market. Even that most voracious of buyers -- the hedge-fund manager -- has lost his appetite, as angry investors yank their money from his funds.
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NoLandGrab: Sure, Manhattan's not Brooklyn, but this can't bode well for big, Manhattan-style luxury high-rise buildings in outer boroughs that haven't yet broken ground, like, um, those planned for Atlantic Yards. It's very possible that market assumptions for the project's nearly two thousand condo units are now out the window.
Posted by eric at February 21, 2009 2:50 PM