As real estate markets around the country reel from the bursting of the housing bubble and mortgage crisis, local pockets of strength still remain. Residential housing in New York City, for example, has weathered the storm better than most and, particularly, the luxury residential sector has appeared surprisingly robust. This article from The Real Deal, looks at the factors responsible for this resilience but, simultaneously, questions how much longer the party can last. Noting that luxury units were up 28.4% at the end of 2007 from the previous year, the authors go on to note some cautionary conditions that might signal a slowdown, namely:
- The predicted national recession will result in fewer Wall Street bonuses and, probably, layoffs.
- Current market strength is somewhat dependent on the weakness of the dollar and the resulting influx of foreign money. Foreign investment money, though, often represents discretionary spending. (Buyers don't HAVE to purchase a residential unit. They're simply acting on what they think might be a wise investment.) This places these buyers in a privileged position, allowing them greater negotiating strength.
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2 comments:
It seems to a reasonable conclusion to use. It's apparent that the luxury real estate market in NY is what it used to be.
It does seem to be pretty resilient. I read an article a couple of months back whose point was that certain mega-cities around the planet really need to be looked at within a global context. Cities like New York, Hong Kong and London -- because they are seats of international importance -- are buffered from the ups and downs of local and national trends.
I guess all of this is really going to be put to the test, as the financial markets continue to struggle...
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