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Manhattan residents have watched skinny condominium skyscrapers rise across the island. These colossal stalagmites initially transformed not only the city’s skyline but also the real-estate market for new homes. From 2011 to 2019, the average price of a newly listed condo in New York soared from $1.15 million to $3.77 million.
But the bust is upon us. Today, nearly half of the Manhattan luxury-condo units that have come onto the market in the past five years are still unsold, according to The New York Times.
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Developers bet huge on foreign plutocrats—Russian oligarchs, Chinese moguls, Saudi royalty—looking to buy second (or seventh) homes.But the Chinese economy slowed, while declining oil prices dampened the demand for pieds-à-terre among Russian and Middle Eastern zillionaires.
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In the past decade, New York City real-estate prices have gone from merely obscene to downright macabre. From 2010 to 2019, the average sale price of homes doubled in many Brooklyn neighborhoods, including Prospect Heights and Williamsburg, according to the Times. Buyers there could consider themselves lucky: In Cobble Hill, the typical sales price tripled to $2.5 million in nine years.
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It adds up to what Michael Greenberg, writing for The New York Review of Books, called a new shameful form of housing discrimination—“bluelining.”
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"We speak nowadays with contrition of redlining, the mid-twentieth-century practice by banks of starving black neighborhoods of mortgages, home improvement loans, and investment of almost any sort. We may soon look with equal shame on what might come to be known as bluelining: the transfiguration of those same neighborhoods with a deluge of investment aimed at a wealthier class."
...the past decade has been defined by the juxtaposition of rampant luxury-home building with the cratering of middle-class-home construction. The future might restore a measure of sanity, both to New York’s housing crisis and America’s. But for now, the nation is bluelining itself to death.
Wealth inequality leads to rampant speculation, to a boom-and-bust and bubble-and-panic economy, the likes of which we hadn't seen since the 1920s or 1890s. Speculation cannibalizes normal investment (with pedestrian returns), just as spiking luxury housing cannibalizes investment in middle-class and workforce housing, as well as cratering the supply of affordable housing through luxury renovations, teardowns, and naked rent jack-ups.
Will the pricking of the "Manhattan" bubble lead (just as the pricking of the Tokyo bubble) to a national (or international) meltdown of grossly over-inflated real estate values? Exposing what are now "too big to bail" megabanks to collapse?
OMGWTFBBQ, talk about making a mountain out of a molehill.
The superluxury market of supertall pencil towers is obviously highly visible, but it's such a tiny slice of the national housing picture. 10,000 empty condos sounds like a lot, but in the grand scheme of the US housing market it's tiny. Even in the grand scheme of NYC housing it's tiny -- it's <0.3% of the housing units in the city.
The US averaged about one million housing starts a year in the 2010s. That's half the rate of the 1970s... for a population that's 50% bigger! That means the rate of housing construction per capita has fallen by two-thirds since the 1970s. THAT's why housing prices are higher -- more people bidding for fewer homes.
^ The luxury market is tiny compared to NYC's broader real estate boom.
Most of the skyscrapers are in middle housing and upper middle class units. That market will continue to boom.
The author is speaking of luxury condos in general, not just skyscrapers. Also could include luxury apartments - for instance, that's mostly what are being built in Seattle, where laws make condo construction and conversion more difficult.
I'd define "luxury" housing as what the "middle" can't afford. The over-supply of "luxury" housing and the under-supply of affordable "middle-class", "workforce", and subsidized (disabled/senior) housing is a real issue in many parts of the country.
NYC, most years, has the lowest commercial and residential vacancy rates in the U.S. And Manhattan, most years, has the lowest commercial and residential vacancy rates in NYC.
In other words, no place in the U.S. is less "empty" than Manhattan. Just because there are a few $100 million superluxury units owned by dudes with 12 homes doesn't mean the overall market is dramatically undersupplied.
And there is no Manhattan construction bubble. There's a chronic undersupply, due to NIMBYs, overregulation, and federal policies that favor sprawl and the Sunbelt.
OMGWTFBBQ, talk about making a mountain out of a molehill.
The superluxury market of supertall pencil towers is obviously highly visible, but it's such a tiny slice of the national housing picture. 10,000 empty condos sounds like a lot, but in the grand scheme of the US housing market it's tiny. Even in the grand scheme of NYC housing it's tiny -- it's <0.3% of the housing units in the city.
The US averaged about one million housing starts a year in the 2010s. That's half the rate of the 1970s... for a population that's 50% bigger! That means the rate of housing construction per capita has fallen by two-thirds since the 1970s. THAT's why housing prices are higher -- more people bidding for fewer homes.
The gist is right, smaller households skew those numbers.
Per the Census Dept., the average household was 3.14 in 1970 and 2.52 in 2019.
That actually makes it worse, since for the same amount of population you now need more houses per capita, since household sizes are smaller.
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