Among the more than 16,200 condo units across 682 new buildings completed in New York City since 2013, one in four remain unsold, or roughly 4,100 apartments — most of them in luxury buildings, according to a new analysis by the listing website StreetEasy. [...]
Already the prices at several new towers have been reduced, either directly or through concessions like waived common charges and transfer taxes, and some may soon be forced to cut deeper.
— The New York Times
Despite record-breaking residential construction in New York City, sales of apartments have slowed steadily in recent years.
NYT real estate reporter Stefanos Chen has analyzed the latest numbers of unsold units, especially in the higher price ranges, following a glut of inventory in newly completed buildings.
"Moreover, a growing share of condos sold in recent years have been quietly re-listed as rentals by investors who bought them and are reluctant to put them back on the market," Chen writes. "Of the 12,133 new condos sold between January 2013 and August 2019, 38 percent have appeared on StreetEasy as rentals."
Came here to suggest that's not housing as much as it is a financial investment portfolio but see it's already been said.
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I wonder how much of this development is sheer speculation—based on what? There are only so many people in the top 1%.
I'd be curious to see a study of the amount of money invested, per capita, each unit. Then do another down the income scale. It would provide a good contrast to how money is invested for the rest of us. I suspect we'd find insanity.
Those are parking lots for money. Their architects are the parking lot designers.
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No doubt a great deal of that speculation was subsidized with tax abatements.
Part of the problem is the withdrawal of foreign investment due to US economic warfare against the world. But the biggest problem is the massive amount of resources tied up in "making" money with speculative development while there are some 65,000 homeless in NYC.
Came here to suggest that's not housing as much as it is a financial investment portfolio but see it's already been said.
this is a good example of how statistics are kind of meaningless the more general and wide you go. In one table, you see more specific data with huge variety — a 2020 building that is 80% vacant (it’s not done yet) and a 2015 building that is 2% vacant. So you throw it all together and you get 25% which doesn’t sounds that crazy considering it will be much less in a few years as prices get tweaked
On the other hand the focus of this narrative is specifically on high end luxury condos in midtown nyc. Clearly speculation is happening all over NYC and even throughout the country. Chinese investors are buying up property all over. So the question is what and where that is happening, and what effect it is or isn’t having on the market. I’m not sure the existence of luxury towers is somehow bad in itself, when it is separate from the inability of government to build quality public housing. Maybe the two are related in a much more complex way — it seems we are all swimming in a polluted lake where government is too corrupt to provide the right solutions and the market doesn’t care to. Somehow this seems related to pop culture where design is not central put political narratives are
It's not just the Chinese, also the Russians and others. However:
the trend is most pronounced in New York, where developers of luxury towers are dealing with more vacant units because they can no longer count on aggressive Chinese buyers. This is a marked contrast to 2015, when Chinese buyers poured $5.4 billion into New York properties, a number that then jumped to $8.8 billion in 2016.
But Beijing started tightening controls on overseas investments in late 2016, and when Xi Jinping was reelected to another five year term in 2017, the government promised to rein in lending that has helped companies like Anbang make several splashy overseas purchases.
By 2018, Chinese investment in New York had dropped to $336 million. . .
https://therealdeal.com/2019/0...
I can't say anything intelligent here, but it just feels weird that major construction is determined by foreign investors, who are not invested in the character and well being of the city. The buildings, at least, are concrete, and there are many. The rest feels like air.
And who is living in the condos? Wealthy foreigners with expensive pied-à-terres?
Related:
“Large global private equity investors including Blackstone, Goldman Sachs, GlobalLand and others have spent more than $6.3 billion acquiring nearly 29,000 units in the Portland area in just the past four years,” said Hanson.
Developers are demolishing sound, habitable, affordable housing and replacing it with housing priced at the very top of the market. The result is to push low- and moderate-income families and communities of color out to the edges of the metro area, away from jobs, schools, public events, parks, mass transit and walkable neighborhoods.
In many cities, investment firms now own enough property to wield the monopoly power to jack up rents, and – with deep pockets and tax breaks – can weather high vacancy rates in order to keep rents high. Wall Street is using those rent payments to create highly profitable new financial assets called rent-backed securities, much like the shaky mortgage-backed securities behind the financial crisis of 2008.
The financialization of housing is happening worldwide, driven by Wall Street’s discovery that residential real estate could be the source of tremendous profits. It’s been described by powerful United Nations reporting, led by Leilani Farha, saying, “Housing is at the centre of an historic structural transformation in global investment and the economies of the industrialized world, with profound consequences for those in need of adequate housing … Housing and real estate markets have been transformed by corporate finance, including banks, insurance and pension funds, hedge funds, private equity firms and other kinds of financial intermediaries with massive amounts of capital.”
Big institutional investors are also hawking a new financial instrument, rent-backed securities. Blackstone pioneered the rent-backed bond, which is a lot like the mortgage-backed “assets” behind the 2008 financial crisis. In 2012, investors paid Blackstone $479 million for the first bonds, effectively a loan to be paid back over time with rent payments. Other investment houses jumped into the game. All of them can use the money they raise to continue real estate buying sprees.
Hanson says that Blackstone sold the bonds asserting that building rents would remain high and vacancy rates low. If rent payments falter, in the coming recession or later, defaults could trigger the collapse of a house of cards of debt, as in 2008. Huge numbers of renters could be evicted in the mess that follows.
from "Wall Street speculators and the loss of affordable housing," Mary King
https://news.streetroots.org/2...
Capitalism is parasitical.
It is also blind. If there are any parallels to 2008, we could be looking at another fall.
The whole thing has been propped up with funny money since long before 2008. All the funny money went to the people who already had waaay too much and have been squeezing the last penny out of everyone else.
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