As a part time real estate attorney. I have known for the past several years that New York Real Estate was behaving like the “cabbage patch dolls, and Nintendo wii toy crazes”. The herds led by Realtor s caught up in there own hubris were yelling buy now, or I’ll sell it to someone else. They were correct for several years, and to be honest allot of people made allot of money, but the pyramid game is over. New York,. For many N.Y Was special, as contrasted to our California and Florida neighbors we seemed ” bullet proof”. The New York Times reported today that the Peter Cooper village http://www.petercoopernyc.com/?gclid=CMTckdTdhpYCFQENgQodojkAFA which was bought a few years ago with leveraged financing is falling apart.http://www.nytimes.com/2008/10/01/nyregion/01develop.html?partner=permalink&exprod=permalink
Met Life sold Peter Cooper and Sty town for 5.4 billion dollars. And now the deal isn’t looking so good. As such this be a measuring stick of other transactions. The sale nearly two years ago was one of those high leveraged deals and Lehman was heavily invlovedin the financing of this purchase. For a nice history of the propery see :http://en.wikipedia.org/wiki/Stuyvesant_Town Now the average rental price of a unit in this complex is $3450.00. The average wage in New York ( 2006 figures is roughly $ 75,000.00) With a combined income of this amount you would take home roughly $6000.00 per month or 57% of your take home income. Experts state that life becomes difficult if you spend over 30% http://www.californiahousingforecast.com/guestcolumn/2007/9/15/percent-of-income-spent-on-housing.htmlor your take home pay on housing. This is where the real problem in real estate and the ecomony have occured, we are disregarding prudent standards for maintaining a ” good living”. We are working too hard just for a roof over our head, and most studios apartment in New York are closet like at best.
As our economy has slowed down, Manhattan real estate seemed immune to the price depression that was worsening in California and Florida. Much of this was based upon the belief that Manhattan was sepcial and that with the dollar being low foreign investors would maintain both the demand and high prices in New York. Well that theory imploded today as the Wall Street Journal reports Ireland, France Aid Banks as jitters get global. http://online.wsj.com/article/SB122276177289789723.html?mod=todays_us_page_one
Maybe the working class, art and entertainment folks will have a shot at living in Manhattan once again. The working class have been the nitty gritty of New York, with all these Hedge Fund, Investment rulers of the world classes Blarney Stones, and Bodegas have given way to too much Starbucks and Sushi.