“It was more drama than any market could withstand as Manhattan sellers started slashing prices.”
By Wolf Richter for WOLF STREET.
The luxury housing market in Manhattan didn’t quite descent to the levels seen after the Lehman Brothers blowup, but close, and it totally wiped out the euphoria that had reigned from 2013 into 2015 when some of the most glorious mind-bending global-headline-grabbing deals were signed and touted.
Sales of Manhattan condos, co-ops, and townhouses, in terms of signed contracts, with prices of $4 million or more plunged by 31% in 2020, from 2019, to just 645 contracts signed, according to data by Olshan Realty. This was the lowest number of contracts signed since 2011, after having already dropped by 16% in 2019, by 5% in 2018, and by 18% in 2016 – with a 6% false-hope uptick in between in 2017. The Pandemic, which had pulled the rug out from under the market in the spring, just accelerated the process:
Signed contracts for homes in the trophy category of $10 million-plus plunged by 42% in 2020 from the prior year, to just 106 sales, down by 61% from peak-luxury euphoria year 2014 (270 sales).
The dollar volume of contracts signed in 2020 plunged by $2.6 billion, or by 33% from 2019, to $5.1 billion, and was down by $6.2 billion, or by 55%, from the $11.3 billion volume in peak-luxury euphoria year 2014:
Developers trying to unload their luxury inventory have faced stiff headwinds for the third year in a row, with just 206 sales in the $4 million-plus category, down 26% from a year ago, after sales in this category had already plunged by 35% in 2019. The number of contracts signed in 2020 was down 57% from peak euphoria year 2014 (481 contracts signed).
“Not since the bleak days of Lehman Brothers crash in September 2008 and the subsequent fallout into March 2009 has the Manhattan luxury real estate market experienced such an unpredictable and disruptive impact as the Covid-19 pandemic,” wrote Donna Olshan in the Luxury Market Report 2020.
The underlying market dynamics are not pretty. The average number of days on the market before a sale occurred soared to 589 days, “mostly because developers were reluctant to discount inventory, often at their own peril,” says Olshan:
In order to get buyers interested, sellers cut prices on average by 12% from original asking price before a contract was signed, up from 10% last year, and up from 3% and 4% during the euphoria years 2013 and 2014, according to Olshan Realty’s data:
The report ascribes the accelerated downturn in Manhattan’s luxury real estate to these factors:
- Change in federal tax law that capped the deduction for mortgage interest on home purchases of $750,000 and up.
- Change in federal tax law that capped the deductions for state, local, and real estate taxes at $10,000.
- State of New York’s increased mansion and transfer taxes and changed rent laws “that discouraged investors.”
- And the Pandemic, which “sent buyers running for the Hamptons, suburbs, and beyond.” The now famed exodus.
“It was more drama than any market could withstand as Manhattan sellers started slashing prices,” Olshan says.
But sharply lower prices and record low mortgage interest rates are bringing in buyers, and sellers are now willing to take huge losses to get rid of their condos that they’d bought at peak euphoria. And so, in the fourth quarter, volume rose above last year’s level. But Olshan cautions, “This is not to imply that the 4th quarter’s performance will extend into next year’s first quarter. After all, we live in unpredictable and disruptive times.”
The bloodletting in the Manhattan luxury market for sellers who’d bought during the euphoria and had paid epic prices for their condos is becoming legend, including earlier in December a $12-million loss on a condo on “Billionaire’s Row” that the seller had acquired in 2014, one among many big-money losers in the same condo tower. Read… Manhattan Luxury Condos See Demand, But at Much Lower Prices with Big Losses for Sellers
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What is so interesting is many are selling their NYC apartments then relocating to the Boston area. High end Boston suburbs are seeing a flood of former NYCers entering bidding wars as well as sucking up all the rentals. For example in Wellesley, 4/2 colonials which rented for $4200 last year are now north of $7500 per month, if you can even find one.
I am having a hard time wrapping my head around anyone leaving high tax, high cost NYC then moving to high tax,high cost Boston where they have worse roads, and worse weather. Sheesh, in Wellesley the don’t even have residential garbage service and you have to take it to the dump yourself. One of my best friends used to live there and he would meet all his neighbors every saturday tossing the bags of garbage out of their Mercedes wagons and Range Rovers. He moved to New York State a few years ago because taxes and regulation in Massachusetts were crazy.
Top income tax rate for highest income is half in MA compared to NYC.
in December a $12-million loss on a condo on “Billionaire’s Row” that the seller had acquired in 2014
well it’s not like it was real money$$$ to them
they likely needed tax deduction and moved to get out of pandemic land
remember in 1972(when gold standard was around) that same hood likely cost $500,000 of REAL $$$MONEY
same VALUE – just CHEAPER(devalued fiat) MONEY
I lived in Boston for a couple of years around 1987…generally a pleasant experience.
However, I remember standing “on line” (as they say) for over an hour at the DMV to transfer registration of my leased car. This was actually the 2nd day in a row of standing on-line (1st day, I didn’t even come close to having all the required ridiculous paperwork).
As I’m wasting time with this beyond stupid governmental experience, representatives of the Soviet Union (hadn’t quite collapsed at this time) were observing this Boston “model of process efficiency” from the side of the room with Mass DMV officials.
I also failed on this 2nd day to have the correct paperwork; finally paid a guy $320 to register my car. His service was advertised in the paper, but I’m 99.99% certain at least part of it was a bribe.
ps: when I retired to FL, this entire process from walk-in to walk-out at the FL DMV took less than 20 minutes…and no bribe.
New York State DMV is also incredibly stupid. It makes the California DMV look efficient.
Paying someone to stand in line for ya…that’s one way to beat austerity……if ya have the bucks.
Can you also afford to pay other people to fight their way through hours of phone menu hell for ya?
They probably do it for the weather. :-)
Nice weather, either location. Unbelievable. Although, I guess if you never go outside…………. easier to be seen and noticed, I guess. Now, what was the famous Forest Gump quote?
I guess the massive regulation reductions by the current administration (caps on deductible interest & $10k limit on deductible taxes) didn’t help these people.
Um. I don’t think so. Try East Coast South as in 70 degrees in Winter South.
New York,, i was there just before corona,, expensive and boring. There are much nicer places in US.
According to Redfin, 6.0% of NYC’s outflows this year were to Boston, behind Atlanta (9.8%), Philadelphia (9.4%), DC (6.7%), and Miami (6.3%). Meanwhile, Boston’s outflows to NY were 9.8%, only second to Portland, ME (12.6%).
I can’t find anything on any rental history that shows a 4br colonial in Wellesley renting for $7,500. Closer to $5,700, yes, but 4br SFH rentals there have been over $5k since 2018.
Sorry Jim, this time your exaggerations have gone too far.
In 2018, above $5K was a premium rental … newer remodel. Old tired 4/2s were well below $5K.
48 Suffock Road, 4/2.5 $7900. The house is old and tired. There was another one that just rented for $7500 … 28 Hillside Road.
Also 6.0% of NYC outflows is a much much bigger number than 9.8% of Boston outflows because NYC population is much larger than Boston.
I just looked at redfin. On Aug 28th, 2020, they reported New York is losing the most residents of any metro, and the top destination is Boston. Case closed.
My son got a “good deal” to move into a brand-new high rise in Manhattan 13 months ago. He is leaving NYC and the highrise when the lease ends Dec 31. I asked him if anyone from the high rise contacted him to try to get him to stay with a sweet deal or even notified him trying to find out if he wants to rent for another year. Nothing. Seems like a strange way to do business. Something seems smelly.
Most landlords can’t offer lower rents because of the covenants in their lending agreements. It’s out of their control.
I spoke to someone today from Chicago. A physician living in downtown overlooking Lake Michigan. Nice views. She’s wondering if she should sell her places (she has a couple) because of the crime. She stated since the BLM protests that things have gotten crazy. People getting car jacked regularly and killed-a regular occurance. People mugged and beaten. It’s getting to the point not safe to walk out. She stated if she sells not sure if she will break even with such events taking place.
There is a reason people are leaving the cities. A big reason: crime.
Uni-party rule has allowed all the worst ideas, along with the most corruption, to percolate to the top in places like Chicago.
My advice to her would be to sell everything nailed down there, as taxes will only go up and people will only continue to flee to more hospitable environments.
And is she can relocate herself, she should do do as well.
I grew up in, and lived in Chicago the first 31 years of my life. It used to be safe to walk down Broadway at night. Rush Street was fun until well into the wee morning hours. Now, you couldn’t pay me enough to go back there.
I like to tell the story of a friend of mine, a very small RE investor. At one time he bought a 39 unit brick courtyard building. It needed some work but he was willing to do it over time. Every time a unit flipped he upgraded it.
Every year he’d raise rents a bit, and every year the City would manage to raise his property taxes by as much as he was able to raise the rents. After ~6 years of effort, he threw in the towel and sold the building, having never gotten any further ahead in income than he made in his first year.
Chicago has a huge pension underfunding problem. If it’s nailed down, they’ll just keep raising taxes on it.
Maybe she can buy up more properties elsewhere. Take advantage of other people in another location. Some people would call that a social parasite. You decide.
Of course, if she’s so burdened with taking her own garbage out of her Mercedes or Range Rover like in MA., we all have to feel just terrible for her.
And some people would call her a doctor. Go figure.
Gee, Mark, you seem more than a little intolerant and judgmental. Reading your comment, it wasn’t the doctor I was feeling terrible about.
Nobody HAS to rent, in the US, it’s legal for anybody to buy.
If fact, I know of few places in the world where you can’t rent. Cuba, China and a couple other shit-holes might be “unrentable”, but have you seen the socialist housing stock? I have, and for the most part, they are’t charming fixer-uppers; check out the Chinese-supplied housing for the 1,000,000+ Uyghurs.
“You decide.”
Sheesh, Mark. To call those two replies a split decision is one heck of an understatement.
People with the sads for landlords that can’t increase profits yearly from jacking rents on people that have NOT seen increases in wages probably don’t realize appreciation on the houses they sell likely made them a little pocket change, not to mention the fact they had equity in the houses due to other people paying it for them.
The myth of the poor landlord needs to die a long torturous death.
Another slow torturous death I’d love to see….this one in the C Suites of corporations.
“This country was founded on the principle that the leaders of one corporation can’t soak up all the money, while the other corporate leaders are left to wallow in poverty”
-Eric Cartman
“Mish” Shedlock recently sold in Chicago and moved to Utah . He said he’s coexisting with the Mormons just fine
“and every form of refuge has it’s price..” The Eagles
The Eagles also sang,” Call some place paradise, kiss it goodbye.”
Re Eagles – Hotel California, Calpers Unfunded Liability, and Tax Refugees
“You can check out any time you like,
But you can never leave.”
We used to be a seasonal play ground for Chicago residents.
Now they are staying, and their friends and family are buying up land and homes.
Freedom 1st…..crime a distant 2nd.
Now I have to deal with bear fans at my local watering hole.
I tell them to leave it ALL in Chicago.
It’s amazing to me that the ruling oligarchy in the USA can’t hold onto American cities. What are they going to do when the class war come to the Hamptons? Just get in boats and row?
Class warfare will never come to the Hamptons They have bought nearly all of us out by now They will probably eat each other when the time comes
Until autonomous robots, every wealthy elite stronghold has always required an army of peasents to maintain them who must be reasonably close by (even if they are intentionally hidden from sight.) The Hamptons are no differet. If you look at the surrounding areas there are numerous small but dence enclaves of extreme poverty where the pesants live.
Nat true dat The workers who are mostly Hispanic commute for the most part from places like Riverhead or further afield usually 5 or 6 in an old Nissan or something I commuted from an hour away for years and finally made the move in 1999 only to get outta Dodge completely in 2015 Alec Baldwin and Billy Joel we’re neighbors They can have it Was nice in the 60s when middle class people like us could afford a small bungalow on the bay Not anymore sadly
Have you ever watched Dawn of the Dead? 1978 or 2004 remake?
Fleeing to Islands doesn’t work. The zombies can get there, too.
Curious to learn more about this explosion in Nashville. Right next to an obvious AT&T switch center. The dopamine in my brain cells wants to think this relates to the the phone companies being paid with our tax dollars to unconstitutionally spy on us.
But I do my best to control my dopamine prejudices and wait for facts.
RE AT&T Nashville
See Breaking Bad, season 5, episode 1, second half.
DID the switching center have all the election internet info?
We have family on Long Island, all nice areas, they are all thinking of selling and going to TX. These are people who have never lived anywhere but NY since their ancestors got off the boat. They have had enough.
Petunia,
Curious…why Texas? Did they say? Have they ever visited there? Texas is fine and all, but it is quite different than Long Island, in every way.
Mi Turn,
I think they want the opposite of what’s going on in NY because the state no longer functions for anybody, and they see TX as being functional. And no, none of them has ever set foot in TX. I would have bet my last dime they would never leave NY and now they can’t wait to get out.
The allure of Texas baffles me. I lived in Austin for 18 months, it was far from paradise. Blistering heat for 4+ months (and increasing), the entire city’s water supply was contaminated for a week, and some guy was blowing random people up. But there’s a lot of tech jobs.
Years ago a Boston friend acquaintances in Albany toyed with the idea of moving there. He sent me links of property he viewed through brokers. Handsome solid victorian brick buildings with retental units. The real estate taxes were absolutely to the moon. Was easy to see why these buildings got partitioned into so many units – no one could afford the taxes if they didn’t.
I think current TX is like most places being noticed.
The time to move there was 20 years ago. Before.
When the hordes start coming it doesn’t matter too much if you already found your paradise, but you won’t find it now as a newcomer.
Here’s the interesting thing for me. In a few more years the State will switch from Purple to Blue in an effort to correct the ills of too many people for available opportunities. And then they will blame it on the Dems.
In these days of Google, I would think the best course for a relocation is to sit down with an atlas and a laptop, and do some research. Then quietly reestablish after a road trip. This TX rush is the modern equivalent of the OK handbills about Calyforniaa….in the 1930s. Plus, requisite skills for a paycheque is always nice to have.
Hopefully they don’t move to Texas and bring Democrat Party voting with them. I’m tired of people moving from NY to places like NC, FL and TX and demanding “reasonable” and “common sense” gun regulation.
Paulo,
For someone coming from NY with the cash from an overpriced and overtaxed home, TX can be paradise. They pay cash for their new home, the real estate taxes are about a third of NY, and they still have cash left over.
Interestingly, one couple have owned land in FL for over 30 years and never built on it. They found FL is good for spending money, not for making it. They don’t even want to retire there.
Why do people get son focused on TX RE tax? I live in a very nice community (safe too) and have a 2,000 sq, ft. brick ranch house that is 20 years old. Nice A/C system too! We pay about 2% property tax on the assessed value of $ 240,000. We also have no state income tax.
Pretty cheap living here with gas prices about $1.70/gal for RUG.
Nice schools, low energy prices (nat gas, power, water, etc).
I used to live in CA and CT. Not going back to either.
People think they are moving from SF or Seattle to Texas or Arizona for different politics. But it is simpler than that. In the grand sweep of history people always settle in the best places first. Areas with good natural transportation routes, access to water, fertile land and pleasant climate always get built out first. Then with time and population these places become more complicated and expensive ( read Tainter’s “collapse of complex civilizations” to understand why). Then many people flock to the crummy left over areas because they are more recently settled due to lack of water, heat, bugs, swamps or geographic monotony. Seems like a downhill race to me ,going from a natural wonderland like San Francisco to the Sonoran Desert in one generation.
I got out in 2015 and lived there my entire 60 years at that point Happy to be out frankly Way too expensive and over rated in my opinion not to mention having to live in a leftist utopia Friends who were police agreed with me and said the courts were against us if we spoke out against the madness Now I live in SW Turkey on the coast and travel to Poland often for my fix of good beer and pork products ?
“The allure of Texas baffles me……lived in Austin..”
Lou:
Austin has never been representative of the rest of Texas. Pretty much like a mini California with liberals crawling out of the woodwork. It’s a good thing they are liking Austin and not spreading out.
Austin is a nice place to live in. Think of it like the SF of TX and you get the picture. In reality, it’s probably a lot more like San Diego or May be OC with the bad parts tossed in.
Of course, the fortunate thing is that TX has no state income tax, which makes the tax changes from Trump not hurt as much as it does in CA or NY or elsewhere.
Meaning, Joe, do what you were elected for, bring back the SALT deduction and give justice and equality back to those of us who voted for you.
I disqualify myself from commenting on the concept of a luxury apartment. I suggest Paulo do the same (lol) We don’t get it, especially the idea of getting into an elevator EVERY time to leave or return. But if that’s your cup of tea…each to his own.
But for me, short of actual pain or grief there is no greater discomfort than being too hot. ‘We have AC’, says someone. Oh great, I’ll put on my AC space suit when I want to explore the outdoors. You can dress warmly for a chilly day, but as we are warm blooded,
we can’t use clothing to cool, excepting of course, the cooling effect of wet clothing.
Which I used in desperation in August when visiting the BC interior (Oliver) from home on Van Isle. A friend took me golfing (I’m no good) and I ended standing right in the blast of the high powered sprinklers…whack, whack.
The heat didn’t bother him. Each to his own.
I remember in the 80s when Texas real estate priced collapsed during the oil embargo a friend of mine had a residential rental near Dallas as I remember. The bank took the property back. It was worth less then the loan, so the bank sold the property and got a dificiency judgement for the amount of proceeds less than the loan balance. The Texas bank then came after her for the remaining unpaid loan balance where she lived in California no less. Banks don’t forgive and write off loan losses on homes in Texas like they do in most other states. Something to keep in mind.
you know what else the pandemic has brought, via masks…mouth breathing
Don’t forget nose rashes.
Your regular reminder that it’s not so much that crime rates are high as that the *perception* of the crime rate is high.
Chicago does seem to have had a big increase in crime in 2020 over 2019, but the numbers are still at 20-year lows.
So, you’re saying Chicago is now better than it’s been in 20 years?
Less people getting caught due to “DeFunding” and the bodies are not counted as Chicago people when they float up on the lake Michigan shore.
This is factually incorrect. Crime has been trending up in 2020 even before the defund movement. Budgets for 2020 were already in place. NOTHING has been defunded. Yet (hopefully).
I think he is saying the 2020 numbers are way up, but they are the lowest in 20 years……or…well….. I dunno.
779 people killed and more than 3430 wounded for 2020 to date. Do you consider this NORMAL? I have travelled in p*sspoor places and never had to worry about someone attacking me. I was in Istanbul (population almost 16 million), walking late at night and no one touched me. I’m sure you can find trouble there if you like and wouldn’t want to be a Western woman roaming around late at night, but heckuva a lot safer. I saw something on TV where folks in poor neighborhoods of Chicago learning how to deal with gunshot wounds. You have been conditioned to think this is normal. It’s not. Many Americans are like you especially those that never travelled to quiet places in the US or overseas.
I wouldn’t live in Chicago or San Francisco even if I won a free place in some type of lottery. Keep it. I prefer a semblance of tranquility. I deserve this as a human being.
Yup, I’ve lived in Istanbul and as far as violent crime goes it’s very safe If you were a western woman you might get harassed ( whistled at, rude comments) but that’s about it As far as petty crime it’s like any other big city maybe even safer
My wife’s friend from the UK, dying from cancer longed for a trip to see San Francisco. 3 years ago, her family and friends bought the trip for her.
She was never so disappointed in what she called a human sewer, in all her life. She said she could hardly wait for her flight out. Her life tragically ended a few months after.
I am just confounded that these city managers can’t see the ruin they’ve brought to their charges.
JK:
Did you not realize that the murders in Chicago are NOT to be reported nationally? Thus they have no place in public discourse. Media has proclaimed it so.
Yep, so it’s just people’s imagination, and the bad public press.
Does that mean if someone decides to rob you and beat you unconscious, we can call it normal? That this is just sensationalism, and statistics point to the fact that “the numbers are still at 20-year lows.”
Ha! They use that BS ‘perception’ (forgive me) argument in London, too.
And in Bilbao -the two cities I know best.
When it gets trotted out, it means the place has taken a deep dive and crime stats are being fiddled.
‘Look, nothing’s changed!’ When we know it has.
Nasty violent people make nice places as nasty as themselves.
Just leave.
Xabier, be careful, you are exhibiting signs of actual observation and critical thinking. Both are verboten these days. Pay attention to your communication device, it will tell you what to believe.
Quick Wikipedia search shows that you are incorrect. If you use homicide rate as a proxy for violent crime, the homicide rate hit bottom in 2014, jumped way up in 2016, trended down for a few years, and is up dramatically in 2020. Homicide is on track to be the worst in 20 years in Chicago.
Property taxes have also doubled in the last 10 years, with a lot of newish buildings coming off their tax abatement as well.
This could get ugly.
When the homes in forbearance don’t get their property taxes paid by the servicers, their homes will be sold in tax sales. Nobody is talking about this, but it is already an issue.
I wonder how co-op and condo associations are doing with their collection accounts.
That is an interesting issue with the ongoing COVID mortgage forbearance program– and I haven’t seen much discussion about messy details of mortgage escrow items like property taxes and home insurance payments.
Perhaps most loan servicers are paying escrow obligations for now and waiting for forbearance to end and collect the owed escrow amounts in a lump sum from borrowers.
Or perhaps some jurisdictions have deferred property tax payments for duration of forbearance period, and again, are expecting to recoup all owed taxes, with mortgagees coughing it all up after the ’emergency’ is over.
Of course however which way you slice it the borrowers who took it on the chin and managed and finagled to continue to pay their monthly mortgage are the real chumps here.
Servicers initially were paying the escrows on the forbearance accounts. But servicers get a percentage of the money they collect as their fee and pass-thru the rest of the money. If too many people are not paying, their cut gets overtaken by the non-payers, and eventually they too have to stop paying to survive.
I heard a RE guy out of Austin, TX say when taxes are due there around the new year, he expects tax sales there to explode. In NYC, landlords who are not collecting rents still have to pay RE taxes. Many are complaining they are not getting forbearance on their taxes and are losing their buildings.
Are there property tax deference programs for seniors in high tax areas in any states? I always just pay my taxes (age 65) because in my rural area with few services taxes are really low, but many of my friends in town have a deferment, and started doing so at age 55. It is similar to a 1.5% loan recaptured upon the sale of a home or upon demise, whichever comes first. I just want to leave my family unencumbered when they inherit.
As for property taxes, my son just purchased a house (nice view home) and the taxes are included with the mortgage payment. It is required. Taxes in ‘town’ $4500 per year for him…so $400 per month collected and placed in a tax account as per mortgage agreement. That way the lender isn’t left holding the bag.
It is against the law in BC for towns and cities to run budget deficits. There can be long term financing for capital projects, obviously, but not for operations (including all debt servicing).
I guess I am one of the few on this site who does not mind paying taxes; property, sales, or income. I like the services, to be honest and our Govt is doing a pretty good job, imho. For example, we are assessed a mandatory $145 per year for weekly garbage pickup. It drives my neighbours nuts, but, it keeps people from tossing shite in the bush and the truck even backs down my driveway to do the pickup. It’s cheaper than dump fees. We also have a level school system and universal health care that is pretty much the same for all residents. The roads are good, we have a decent ferry system, and like I said, local govt cannot run deficits. It all takes money to run operations, business, Govt., or a home.
It might be easier to vote out politicians in a parliamentary system, plus there are no corporate or union contributions allowed, whatsoever.
Yes it will Not looking promising for the middle class working family Very sad what’s going on in my home country
1) Cash is rising in the banks. M-1 is up in 2020 because the flyover and suburbs home owners are selling to SF & NYC residents, escaping Covid-19. They are cashing in before higher capital gains taxes and CA prop 19 become law in 2021. .
2) RE volume is popping up in the suburbs and the flyover, but NYC & SF volume is plunging.
3) FL,TX & AZ have a long history of boom and bust. They might follow the leaders in SF & NYC.
4) RE assets are banks best collateral. When the banking sector will start to crack, when people will no longer have trust and faith in the Fed and the tape, M-1 will shift to the mattress and King George.
5) King George was the only sovereign accepted to start an Arab
revolt, delivered by Lawrence of Arabia. But there were not enough
King George coins in the British vaults. Thanks to the US tax payers
Mesopotania gained their freedom, at least for a while.
Until Kermit Roosevelt and the CIA did the Brits a solid?
There I go, confusing Mesopotamia with Persia again. ?
Michael Hudson claims 80% of all bank loans go to buying property. Which to me explains the property booms and busts that are now a regular feature. Popular stocks are pulling up the indexes, but the underlying market is going nowhere fast. Wages still not going up enough. Private debt is being paid off somewhat, but two negatives don’t make a positive. There will need to be some major debt relief, either willingly or unwillingly. The former will be less disruptive than the latter. How to repurpose all this sloshing around swapping unproductive assets? Got me. Taxes probably. Raise them. That would encourage productive investments over non productive ones.
I’m so glad I live in flyover country. Low taxes,good services, a few annoying liberals,grow a lot of my own food. Paradise!!
Your good life won’t be tolerated! Undoubtedly because you’re ‘privileged’ in some way.
:P
Good services?
Red state America has statistically the worst, healthcare, education, and infrastructure. Sure your gated community might be nice… But with no taxes to pay to keep it nice… conservative tax policy will just run it into the ground, then blame ‘others’ for the decline… Move, rinse, and repeat.
Gated community in flyover?
I like that. It may give us a marketing edge for our cattle.
Tom,
A ‘gated community’ in FlyOverstan is a euphemism for ‘Cattle guard’!
Gah! I see you got it.
My bad for not fully reading though your statement.
Excluding the schools in liberal-run cities, flyover country shows much higher educational achievement than on either coast. The one exception being New York. Why do you think everyone with money in California sends their children to private schools? Almost half of all public-school teachers in Los Angeles send their children to private schools.
I think when buying a stock or home it’s wise to get a good understanding of the legacy pension and other obligations you are signing up for. They can over time eat up the asset value of what you purchase.
Are you saying IL and NY and CA K-12 schools and transportation infrastructure beat those in say ND? Uh huh… Check public school rankings for a reality check.
And healthcare is largely a private enterprise, your taxes aren’t the reason for the quality of the healthcare in blue states.
I’ll grant you better state colleges in some states like CA, but certainly not in the Northeast.
You are paying for generous pension benefits and union wages for your public workers. Glad you are happy to do so. I’ll pass.
You do realize this exodus is the beggening of the end of all that, right?
You could be right. But I’m old so I will enjoy it as long as possible.
I’m so old, I’m gonna die before ever migrating outta blu territory!
With all the wide open space in the mid-west it won’t be long before a lot of tents start popping up.
New neighbors!
Nah. The tents (and human poop) will remain on the sidewalks of San Fran, LA , Portland, Seattle & other “destination” cities.
None of them want to spend a Fargo, ND winter in a tent.
From the charts – this NYC Real Estate implosion started in 2015.
The covid just increased the downward slope.
Is the NY exodus harbinger of problems in the financial sector? Did the City of London get a repreive with the Brexit deal? There are good reasons why you cannot build a financial center everywhere, (without the requisite technology) . My prediction for 2020 beyond includes decommissioning the NYSE. Stock trading is arcane like barter with sea shells, when only a few people have access to the ocean. Would be interesting to parse the demographics of the exodus, but in a militant society everyone serves the military one way or another.
FL is getting the bulk of the rich refugees coming out of NY. Some big hedge funds have recently moved there.
There’s a science fiction movie “Escape from NY” which I saw a while back (early 80s) and is worth seeing again. It was actually filmed in St Louis, next to the Eads bridge. The city is falling apart into complete anarchy, with no law & order and conditions in the city get so bad that President of the US orders a wall built around the city to prevent anyone from entering or leaving. I thing the movie can no longer be considered science fiction. I can see Chicago and NY following a similar path if the clowns running these cities don’t get their act together.
Not sure about Chicago but I know some people in Manhattan that seem to be self destructive They will go down with the leftist ship Of that I have no doubt
Not sure how old you are, but the economic stagnation in the 1970s hit New York very hard. The city was near bankruptcy, crime was high, in other words, the end was near. That’s probably how the movie came about, inspired by real world events, but 20 30 years on, the city reinvented itself and as they say the rest is history.
This time around though, the challenge is bigger and it’s not New York specific.
I’m old enough to remember I had a friend and we went in together in 1980 and bought a three family in Ridgewood, Brooklyn Taking the subway was alittle scary but we were young and fearless or crazy perhaps
Sold my share and moved to Long Island after getting married and having a child( Should have stayed single) but that’s another story
They should do a re-make of the movie “Escape from NY” with the Donald cast as President of the United States. He like walls and he has experience with building walls and would fit the role perfectly. The movie ends with the President going into the ghetto with a machine gun and mowing everyone down. The movie would be a blockbuster hit. Hollywood would make a billions
That’s the Hollywood version. The real life version would be him fighting Average Joe in a bloody battle. At the end, both have lost so much brain cells, they can’t even remember why they fought in the first place.
These four years have been a case of truth being stranger than fiction.
Except you’re conveniently forgetting who delivered more (jobs, income, economic development areas, et al) to that cohort than any democrat; we’ll soon see how the new crowd (in prior lives, these guys sent a lot of minorities to prison) does…
Good ole St Louie, MO. It has seen better days, to be sure.
By the way, that city is one of the E-Tax municipalities, whereby they impose a special Earnings Tax on workers who work in the city but live outside it boundaries. Kansas City is another Misery (Missouri) town that levies an E-Tax.
The tax I believe is about 1% of wages.
Pandemic and WFA (Work From Anywhere) paradigm has raised some ugly questions about legitamacy of E-Tax now, since many outside workers no longer physically work in these cities and thus are not using any city infrastructure or services.
I expect both cities to fight tooth and nail to keep E-Tax levies in spite of WFA. They have grown fat, sassy, and dependent on that revenue (in KC it approaches something close to $300 million/year).
They have an uphill fight IMO mainly because employers that employ these E-taxed workers would still have a physical presence in city and still pay city taxes in one form or another.
Great movie, everyone needs to see it. Future reality.
From there it will be time to make the leap to ‘Planet of Blu Ish Monkeys’.
‘My God! They Finally Did It! … They Burned It Up!!’
This change in the tax laws as a result of the 2017 tax bill:
“Change in federal tax law that capped the deduction for mortgage interest on home purchases of $750,000 and up”
“Change in federal tax law that capped the deductions for state, local, and real estate taxes at $10,000”
created some unintended consequences all over the country especially in the high tax states.
When it first passed I interviewed a dozen people and asked them what they thought of the new tax law as it applied to their real estate holdings
I found most people were initially unaware of the change as they have accountants do their taxes and accountants had no incentive to tell them that they would be better off going on standard deduction, which would mean they didn’t need their accountants any more.
The unintended consequences are a complete distortion of the real estate market. People with the high mortgages over $750.000 I believe are grandfathered in so they will stay put to keep their high mortgage interest deduction. So there are less homes on the market that there would otherwise be. For homes that are paid off, the owners have incentive because of the ultra low interest rates to rent them out and move to where they want to live. So there are less listings on the market resulting in higher prices for available properties.
I NYC the above distortion is overshadowed by the desire to “Get the heck out of here”. So every location is different. Where I am (the Swamp) I haven’t seen the even slightest affect of the new tax laws on property values. Properties are snapped up as soon as they hit the market.
This too will change Count on it My son went to Georgetown and I’ve witnessed some crazy things happen in the little time that I spent there Why anybody would want to live there baffles me other than money
Unintended consequences?
I’m trying to squeeze out a tear for these poor people stuck with these pieces of real estate. But I just can’t .
It’s probably because the $12/ hour barista that just served me is on food stamps. In case people don’t understand, there IS a connection. You may just not be able to see it.
Which is why idiots spend what would be the fortune of a lifetime to some poor working on a:
Cement bunker, in a poorly built, tall building ,with a view of a dirty crime riddled city and is so expense that it would shock any half way intelligent person.
Sounds stupid to me. Oh, and yes, I have spent time in the precious city of New York. I understand it’s allure.
I have absolutely NO respect of anyone involved in any aspect of this whole industry. I sincerely hope the whole market collapses dramatically. Even though I know I’ll pay the price as a taxpayer eventually bailing out such idiots.
Oh, and I am not some bitter poor guy just hating on successful or rich people. I’m just a really, really smart guy with money. I can see stupid from a mile away! Especially when it’s sticking 40 floors up on a city skyline!
-R
As someone who left New York for sunnier pastures down in Florida, I second everything you wrote there. What a disgusting, cold, wet, overcrowded, expensive place. I don’t miss it at all.
But the pizza and bagels are good. Contrary to what manny believe it is hard to find a good bagel in places like California. They just don’t get it.
I don’t like bagels, but I will concede that it is easier to get good pizza in NY.
I cant find a place in DC that makes a decent Pizza. I make them myself at home. Use Pita bread, tomato sauce and Mozzorella cheeze.
I did work on NYC long back and I second every word said here
“It’s probably because the $12/ hour barista that just served me is on food stamps. In case people don’t understand, there IS a connection. You may just not be able to see it.”
Oh, they can see it. They just don’t want to understand it, because of the cognitive dissonance engendered thereof.
As always with the contradictions at the intersection of economics and class, Upton Sinclair’s well-known epigram applies and explains.
The barista that served me when I lived in Sag Harbor was a retired corporate attorney He worked there to get out of the house and socialize I know an anomaly not the norm
Allure:
Night Clubs….closed?
Restaurants….closed?
Theatres…closed?
Sports events….closed?
High end shops…closed?
Best police in US?….debased and demoralized
Access to high end offices….closed and for lease?
Do I exaggerate? Honestly, do I?
re: “Had he done a few more he would have been reelected.”
I don’t disagree, and I very much dislike Trump, but IMO if he’d just taken COVID seriously and had tried to lead the country though it–or, at the least, supported and gotten out of the way of the medical professionals–he would have been re-elected.
And didn’t lie incessantly, or golf 309 times in 4 years, or actually read briefing papers, or didn’t have constant turnover, or stopped tweeting…..
Like if he was a different person? Like that? :-)
I think the tweeting did him in. Seriously childish.
Not just tweeting, but his total lack of leadership and empathy during the pandemic.
I don’t think he was to blame for even a small portion of it, but he just didn’t “act” like a leader, and that did him in.
Paulo
Whoa!
If you’re going to start expecting honesty and accuracy from politicians, you probably have bigger problems with “Russia Collusion” and impeachment lite (couldn’t even cite a crime in the articles of impeachment) Democrats (Pelosi, Schiff, Nadler as starters).
Obama/Biden didn’t even attempt to restock the national warehouse after the mismanaged Swine flu scare (PPE, respirators, et al). In between all the contemporary Democrat charges of racism for suspending Covid flight into USA, Trump expedited not only PE and respirators, but he delivered a vaccine in less that a year (MSM & politico said this was impossible).
Hiring bad people was the worst thing he did. That led to constant turnover.
Also not draining the swamp as promised.
Massive budget deficits.
Tweeting was not seen as Presidential.
No way DJT could or can be elected again when our owners, AKA the oligarchy have had enough of his inconsistency, etc. They still know how to do what it takes, as they did SO many times in USA starting with eventually overcoming Jackson in the early 19th century to take control of the finances of USA.
Who do you think owns USA and most every other organized crime syndicate AKA ”nation” these days?
Certainly NOT We the Peedons in any of the possibilities of the world, , including, to be sure USA!!
Any kind of common sense and in total depth analysis/investigation of ownership of any and every global industry will point back quickly to the one percenters, or whatever We are supposed to call our lords and ladies these days of politically correct utterences,, exactly as has been the case for at least the last two or three thousands of years for which some records exist.
Before then, no reliable records except for those approximately 5,000 years ago which show exactly the same thing.
Try to get used to it and relax, especially during the Holy Days of the winter solstice period when we all need to pray and beg the sun to come back to us once again, for which there is no absolute guarantee, especially recently.
Well said, VVN…..when are us peasants going to get the message that while we have a two party political system, it’s really just one party in the end.
The Main Street Electrical Parade is over. Tommorowland, Fantasyland, and Frontierland are overpacked with tourists that want something more than standing in long lines for very little bang-for-their-bucks. And Uncle Walt was right for many…When you wish upon a star, the four hundred day weekend can come true. Of course, if the fridge starts looking less filled, singing grasshoppers start looking more tasty. The expensive castle condos in Wonderland are full of juicy ones that might fill the bill on the menu. Maybe Mickey’s recipe book covers how to prepare them.
I recently saw 2.6% interest rate on a 30-year mortgage, an all-time low I believe. Can’t get much lower from here.
It was the deal of a lifetime while it lasted. Buy a house with 3-20% down, watch the value of the house appreciate 5-20% per year, while you refinance into a lower cost mortgage every other year. Your asset goes up fast, your debt service goes down fast. It was a sweet deal that dropped into many peoples’ lap, by pure luck in most cases.
But now its done. Rates can’t go down. Asset prices are so high relative to median income, they are threatening to plummet. Central banks are out of firepower and can’t come to the rescue with anything except money printing and hyperinflation, which soon leads to inflation and higher interest rates.
We are witnessing the end of the RE era.
Those who buy today might do OK if they stay in the house and pay the 30-year mortgage on schedule, but they’ll pay a ton in opportunity cost when asset prices deflate.
Yes, which is why Powell keeps insisting that the Fed is not out of tools.
The lady doth protest too much, methinks.
The Fed is out of tools. They can’t admit it as it would tank the markets.
Exactly. Their only “tool” left is to convince people that they’re not out of tools, so that private investors buy stocks and bonds for more than they’re worth.
They still have assets they can purchase to expand their balance sheet. Still can get a loaf of bread for under $50 they got a ways to go yet.
Old School, but what? Without Congress’ approval, they can’t buy anything other than Tbills or MBS.
Those who buy today will not do OK. Its too late. To make money you have to buy low and sell high. Right now, as in the bond and stock market you are buying high. The only way for real estate to appreciate substantially is to have us go into another Weimer Republic. That ain’t gonna happen. And I see those who have been looting their home for cash via refinancing getting swept up in the correction and winding up with negative equity. I’m not going to lose any sleep over any of them, especially after using the pandemic to cash in.
SC, I fear we are trapped in a paradigm of buy high sell higher. It may not work out as planned.
Gunlach is a smart guy. He was floating the idea that now was a good time to lock a mortgage in before the Fed gets its wish of creating inflation.
BippityBoppity Boo Hoo! NuYak.
The only thing I am sure of right now is that the weather in coastal California is fine.
South of Marin. North of it is freezing cold rain. Of course, north of Marin is like Oregon anyway.
Yeah, the real misery starts around Novato…..best to avoid it at all costs.
This appears to be a matter of birds flocking together.
President Donald Trump carried 2,497 counties across the country that together generate 29% of the American economy, according to a new study by the Brookings Institution.
President-elect Joe Biden won 477 counties that together generate 70% of U.S. GDP.
Hence, people that want lower wage jobs and have less education are moving to be near like-minded people, and then, the opposite side of that coin, where people are disgusted living around people who can’t think?
The “percentage of GDP” is a really annoying canard. First, our free trade policies and constant printing for Wall Street, among others, disadvantage economic activities that were traditionally “middle American” activities, and advantage financial services, big tech, and other traditionally “blue coastal” activities.
Second, each $1 of GDP is not created equal. How much can Goldman Sachs and Facebook produce without the food, clean water, and energy provided by the more rural areas?
Third, there are plenty of “red” people in “blue” counties, and vice versa, so the metric you described above isn’t particularly useful, except as a dishonest liberal jab.
R –
To your point, US trade policies over the past four years have been devistating to rural counties, especially to US farmers trying to retain and expand access to international markets. Perhaps Brexit will help drive a Manhattan RE recovery if finance jobs head this way.
OutWest,
I’m not talking about Trump or anyone else, specifically. But the fact remains, “free” trade and other things that have devastated our manufacturing base, along with the financialization of the economy that allows Wall Street to strip off a higher and higher percentage of GDP, HAS devastated middle America (not just rural people, but also middle class people in the cities).
This is gross over simplification of a very complex situation. Why does anyone pay any attention to pronouncements from the likes of the Brookings Institution which has been wrong and dishonest on nearly every serious issue facing this country. This does not even address the low paying service jobs that were just lost due to the pandemic, forcing honest hard working people to move to rural areas where the cost of living is much less, just to put a roof over their head. Or the people of substantial means who are tired of living in or near the swamp and want to move 60 miles or more away just to be in “God’s” country.
You mean like the writer of that last paragraph?
The paragraph above from Martha Careful
“Hence, people that want lower wage jobs and have less education are moving to be near like-minded people, and then, the opposite side of that coin, where people are disgusted living around people who can’t think?”
is what I was referring to.
Highly educated people often ‘can’t think’ too, on certain issues.
But they are certainly more conceited.
In fact, the educated are often the most suckers for propaganda.
Some Americans, I would say, need to stop sneering at ordinary fellow citizens.
It does no good at all.
If you can work that into a thesis on the politics of resentment; systemic racism and sexism, and a feeling of entitlement, you have something.
Social justice seekers typically appear to have an extra helping of hubris. That is unfortunate.
+10?
If you choose to demonize people who disagree with you politically as “people who can’t think”, or worse, implying that people without formal degrees are incapable of thinking, you are far more prejudiced than the people you are describing.
President Trump didn’t win a single county that manufactures social media which the important segment of American production. /s
Exactly, give me back my SALT deduction, bring back equality to the system.
That’s why I voted for the man… I’m in it for the economic self interest only. If he doesn’t do it. He will be replaced.
Better they move to another ‘socialist’ paradise and bring their ‘woke’ politics there than to flee to ‘red’ states and bring the destructive ideology for others to suffer.
The Woke crowd is so high-minded that they feel it is their mission to sally forth and impose their new-found wisdom and virtuous beliefs on benighted denizens of backwater hinterlands.
As long as they continue paying top dollar for my organic firewood & my gated community, vegan raised, carbon neutral beef, they can preach until the bovines come home from free ranging.
Sell new York and grab The money and move to smaller city
The other political party is ruining America!
1) Those in the restaurants business had plenty food to eat every day, for free, but the restaurants are closed and the food carts are gone.
2) In NYC food prices are rising while RE prices are falling. Inflation/ deflation, taxation is the cause of deflation.
3) If NYC, flooded by immigrants from all over the world, become
a “robber nests” for the second time, infected by shooting, kidnapping, murders and unruly mob plunging supermarkets and corner stores, because people are hungry, how safe is the penthouse on the 40’s floor.
4) Taking the elevator to the 40’s floor is no fun, but during a blackout it can get much worse on the dark staircase.
5) The stupid birds were twitting from early hours in the morning, waking sleeping people up for no reasons, dropping on the balcony, but now they are in FL, on the golf course, because it’s cold in north.
6) If NYC chaos will spread to the flyover country, farmer will
hide their products instead of selling it in the free markets.
7) The $600 or $2,000 gov stimulus will not keep us safe from the mob,
until each of the 30 millions 1619 victims will get their $500,000 reparation .
The Bom is coming to help you. The Bom opens a foodbank, they take you to the doctor, they find your prescription drugs. The Bom stays up all night in power plants and hospitals to keep the lights on. The streets are safe because of the Bom. The food pantry hoarders in flyover country have nothing the Bom wants. They grow GMO feedstock to export to China which has no living culture. Immigrants come to this country to join the Bom. Their one desire, that they too will learn to stop worrying, and love the Bom.
1) Germany transferred gold to the crumbling Ottoman empire as incentive to declare a war against the Russia.
2) When the German mark was extremely devalued in the 1920’s, Germany couldn’t export their industrial goods to other European countries and US, as China did in the 80’s, because there were no bilateral agreements with Germany in the 20’s.
3) William Bullitt US ambassador to Moscow in the 30’s, a socialist : socialism is the best vaccine against the spread of hard core communism, but financing social programs cost a lot of money.
5) Health care for free, education for free, retirement for free… by issuing gov debt bought by the Fed, in unlimited quantities, can be done, along with other central banks, because central banks are never out of ammunition. But businesses cannot compete with the gov piling debt. They go BK.
6) Social programs finance by high taxes are not popular. They cause deflation and RE collapse .
7) Social programs financed by issuing debt bought by central banks,
with money diverted to the fun game, to the stock markets, cause bubbles, because investors cannot fight the Fed and the tape.
8) The gap between the top Pareto chart and the rest of us is growing.
9) US Total Assets = $130T. // US Total Liabilities = $70T. // Total Equity
= $60T. // if Total Liabilities keep growing while Total Asset shrink, after the stock markets and the RE bubbles pricked, Total Equities can go NR.
The basic game:
Mayor’s Move: Turn the city into a high taxed, uninhabitable, unaffordable mess, and blame New Yorkers for it.
New Yorker’s Move: Leave asap.
Mayor? I believe its your move. Tick tock, tick tock…….
This is perhaps the most honest post here: Thanks Xabier.
“Highly educated people often ‘can’t think’ too, on certain issues.
But they are certainly more conceited.
In fact, the educated are often the most suckers for propaganda.
Some Americans, I would say, need to stop sneering at ordinary fellow citizens.
It does no good at all.”
Yes, thank you, amazingly elitist and prejudiced.
About sneering at people from flyover country.
I grew up in a NYC suburban area when I was young and had to listen to this crap for my entire childhood from my parents and most of my relatives and neighbors. I thought I heard the last of it, but in the swamp (DC) I have to hear it all over again. I’ve learned to ignore it and not respond. The people that say this garbage just demean themselves.
As someone who grew up in Westchester, I second this. And in my experience, none of these people actually KNOW anyone from flyover country.
Each over bearing Government action, causes an equal and opposite reaction.
In such circumstances, the reaction may be slow to develop, but once on the move, it destroys all in it’s path, much like the tsunami.
Ground report from San Diego: The real estate market is hot here and million plus homes are selling very fast. No slow down I see for months.
Although the economy is suffering bigly.
How are the $135,000 homes selling?
Wolf, I keep looking for some remarks, in one of your real estate (RE) posts, on federal taxes collected on capital gains on RE, which go to Obamacare.
They called it a surtax; it was a new tax as of the passage of Obamacare in/about 2010.
In a nutshell, (for individual taxpayers), if you sell a home you have lived in, and owned , for at least 5 years, you subtract the original purchase price, and cost of improvements, from the selling price.; then, you can exclude up to $ 250K of gain; and then you start paying 3.8 % .Obamacare surtax on your capital gains.
If you have a vacation home, second home, or investment property, you don’t get the exclusions. There are fine points (married or single; filing status…what is your MAGI ?).
Above info from fool.com, the balance.com, and Investopedia.
It has occurred to me in recent years that the ZIRPs etc. have benefited Obamacare-taxation with higher RE prices catapulted up by “low interest mortgages”, HA. How much is being netted in for Obamacare, anyway ? (even with price reductions in RE, as per your post above, Wolf)
(….the good news: looks like the “medicine cabinet tax” (one of the O-care surtaxes) was partially repealed….)
Just wondering
Thx, Wolf
1) A middle age nursing aid lady, with a hot temper, who speaks broken English, can escape rent, transportation and spending on food, by living in the house of a rich lonely helpless old lady.
2) She will drive her to doctors, to get CT’s scans, MRI’s, outpatient surgeries, physio, pharma, oxygen tank… because the fragile old lady is a gold mine on a walker.
3) One night the old lady had to go for #1 too many times
4) The nursing aid had enough in the middle of the night. She smacked the old lady, pushed her violently on the wall. The old lady collapsed.
5) When the ambulance driver asked her what happened : she fell.
Why the injuries : she got them when she fell.
5) Few weeks after the death, the nursing aid got a new job, in another rich old lady house, saving money for retirement.
6) Fake!