“Why Manhattan’s Skyscrapers Are Empty” The Atlantic Jan 16, 2020 by Derek Thompson
“Approximately half of the luxury-condo units that have come onto the market in the past five years are still unsold”
After the mortgage crisis of 2008, real estate investors have focused single-family home and condo efforts on projects aimed at higher income buyers. NYC is an extreme example, condos were built for locals and especially cash-laden buyers from China, The Middle East and Russia. NYC prices increased from $1.15M in 2011 to $3.77M in 2019. Even though half of units entering the market since 2014 remain vacant, building owners are reluctant to find market-clearing prices. In addition, a trifecta has contributed to the new inventory glut. First-, the Chinese government has restricted their citizen’s ability to move money offshore, second-economic headwinds have hit China and the oil-producing countries and third-the U.S. Treasury is targeting money laundering tied to high-end real estate.
All this contrasts with NYC housing woes where 80,000 live in shelters or outside and where the middle class has been priced out of NYC and gentrified Brooklyn. This is playing out in other competitive markets like Los Angeles and The Bay Area as well. “Bluelining” or focusing investment on wealthy buyers has also been influenced, to this point in time, by larger [more expensive] home designs and poor urban planning. There’s a sense that these housing trends are contributing to regional and generational wealth inequality. Compared to their parents, at the same age, home ownership is significantly lower for the current generation. See the article for more detail.