Ron Insana, a CNBC and MSNBC contributor, warns that New York City’s real-estate market is about to crash.
He said while a Manhattan skyline is “absolutely filled with construction cranes” does reflect a building boom, it’s all for high end condos.
“Despite the rosy view of builders, there is a serious risk, in my view, that the supply of (mostly) expensive new housing in New York may outstrip demand for some years to come,” Insana, the author of four books on Wall Street, wrote on CNBC.com.
“It's ironic that New York City largely escaped the property bust that engulfed the world in 2008, despite being the very epicenter of the mortgage credit crisis,” he said.
“For Manhattan, the after-shock of a national real estate crash may be worse than the earthquake that rocked the nation itself,” he said. “If you see steep discounts at the city's tallest buildings anytime soon, you may still not be able to afford a multi-million dollar apartment, but you can make money shorting those entities most exposed to an edifice that is likely about to get wrecked.”
As an example, he cites the lack of interest in the tallest residential structure in the Western Hemisphere, located at 432 Park Avenue in New York City.
“Only 13 units have closed out of 141, according to The Real Deal. Granted those sales brought in a whopping $170 million to the developers, but it raises questions about whether or not the Manhattan real estate market has "topped out" both literally and figuratively,” he explains.
“Some 5,377 new high-end condos units are being constructed at a time when DNA Info adds that foreign buyers are either backing away from New York purchases, or buying cheaper residences, thanks to the strength of the dollar, which makes expensive New York apartments that much pricier,” he says.
The U.S. Treasury Department's recent mandate that the identity of foreign buyers be made known, for purchases above $3 million, could be discouraging overseas investors from buying pricey real estate. And that could have a dramatic impact on sales going forward, he says.
Meanwhile, the erection of a region's tallest building has, since the early 1900s, also has been associated with both stock and real estate market tops, as well, he points out.
Other experts agree that the Big Apple's real estate market may be hitting speed bumps.
"The price growth in both New York’s Manhattan and Brooklyn boroughs has been slowing since December 2012 and July 2015, respectively, with days on market also reaching recent highs," Luxury Daily
“Sales and rent price growth are stabilizing across Manhattan and Brooklyn,” said Alan Lightfeldt, data scientist at StreetEasy. “Sellers in this market may discover that they cannot set prices and expectations high with the anticipation of a quick sale. The market is starting to look more like 2013, a period of stable growth prior to the surge of 2014 and 2015.”
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