Warning: New York City’s Pending REAL ESTATE CRASH | Episode 30

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Do we have front row seats for the end of the country’s most popular, most resilient, hottest-by-definition real estate market? We’ll look at the disturbing facts today. I’m Carole Ellis. This is Episode 30.

Is it really possible that the New York City real estate market could be in trouble? It’s hard to imagine. When you think “hot real estate” you may think of the west coast today, but when you think of the DEFINITION of high-end, high-value, nearly-always-appreciating real estate you’d love to own, you probably think of New York City. So valuable that it’s basically out of the realm of possibility for most owners. So rare it’s generally perceived as impossible to lose if you own it. As desirable as Coke stocks passed down through generations. Square footage in the Big Apple.

And now, it’s starting to look like the market to end all markets could be in serious trouble thanks to a dangerous overreliance on foreign investors, ultra-luxury buyers, and what has historically been an extremely solid winning strategy of ongoing development whenever and wherever possible.

Here are some troubling facts about NYC’s real estate market this year:

  • 432 Park Avenue, the tallest residential structure in the city, has 141 apartments for sale at an average sale price of $21 million. Of those 141 units, 13 have closed. Sure, that’s $170 million in sales, but compared to the past few years, it’s, well, a little slow. In fact, residential luxury apartments are sitting on the market for about three months these days, a timeline that has led many analysts to speculate that the “big money” just isn’t as eager to spend in the Big Apple these days.

Here’s another:

  • More than 5,370 new high-end condo units are presently being built in New York, despite indications that a lot of the buyers for these condos are not, well, BUYING, or at least they’re not buying super luxury, ultra-high-end residences these days (you know, they’re restricting themselves to luxury high-end thanks to the strength of the dollar and their own countries’ uncertain economies). Given that foreign buyers accounted for two of every five high-priced real estate buys in recent years in New York and three in every 20 real estate transactions in the city’s TOTAL, that new reticence to buy could spell big trouble for developers sinking billions into a skyline that may not have much more roo for expansion.

And finally…

  • The U.S. Treasury has taken direct aim at the luxury real estate market in New York! There, unlike just about anywhere else in the country (at this time, but that’s another story), anyone paying more than $3 million for real estate must disclose their individual identity to the U.S. government rather than using a corporation to make the purchase. On the face of it, this regulation is intended to help prevent money laundering, but it also makes a lot of mega-millionaires VERY SKITTISH when the U.S. government demands they reveal all sorts of private details about themselves and their finances. So that could also be impeding market growth.

So what does this mean for NYC real estate as a whole? Well, it means that the top end of the market could be heading for serious trouble and, by extension, there is a grave threat to commercial development as well. Hotel expansion and retail expansion is presently keeping pace with the high-end luxury real estate expansion, and the entire thing is starting to look, well, a bit top-heavy. Business is booming now, but if you are investing in ANY area that relies heavily on Big Apple real estate to thrive, evaluate that deal carefully before you sink a lot of money into a long-term investment.

Want to know how to operate SAFELY in volatile and potentially volatile markets? The key is in the details. I’ll provide you with those details as well as a case study on the topic in the REI Today Vault today! Not yet a member? No worries! text REITODAY no spaces, no periods, to 33444 I’ll provide you with fast, immediate access to all sorts of great trainings, news coverage, interviews, and lot more timely information that will help make your investing safer, faster, and more profitable.

And remember, when you do that, you’ll also be able to GROW YOUR NETWORK by interacting with me and your fellow listeners to REI Today… so stop by to ask questions, make comments and network with other investors across the country. Text REITODAY no spaces no periods to 33444 or head over to right now.

REI Nation, thanks for listening in and always remember this:

Your best investment is your own education.

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About the Author

Carole Ellis is the host of Real Estate Investing Today, a popular 9-minute daily podcast focused on educating real estate investors about the important topics that will make their investing SAFER, FASTER, and MORE PROFITABLE. She's also the editor of the Bryan Ellis Investing Letter. She has more than a decade's worth of experience in and reporting on the real estate industry and, additionally, has written dozens of courses on the topic. Carole lives in Kennesaw with her husband, Bryan, and four children. She believes wholeheartedly that your best investment is always your OWN education.

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