Why are the skyscrapers of New York City empty?

Between 2010 and 2019, luxury tower apartments went from $ 1.15 million to $ 3.77 million on average in New York. (Shutterstock)

From 2010 a 2019 there was a real estate boom that redesigned the skyline of New York and left it – along with Shanghai and Dubai – with a lot of skyscrapers: the developers made apartment towers serially. They seemed like a huge business: in those years, the average price of a new one went from USD 1.15 million to USD 3.77 million, according The Atlantic. However, of the 7,727 new apartments that have been added to the market since 2015, almost half, 3,695, not soldrevealed The New York TimesSuddenly there were fewer high-end buyers willing to pay record prices. Thus, between excesses of the largest city of the United States It is now counted that it has some 80,000 beds occupied for the homeless and the skyscrapers vacant for the rich.

What happened?

Although real estate businesses are usually a very local market, in some metropolises, homes are also investment and pied-à-terre for global capitals. “Developers are betting big on foreign plutocrats –Russian oligarchs, Chinese tycoons, Saudi royalty– who want to buy a second (or seventh) house ”, he explained The Atlantic. And after the 2008 crash, as prices dropped and New Yorkers were left without credit, there was many foreign investors. Until “in 2015 the confluence of a headwind in the global economy and changes to property taxes and sales interest cooled wealthy buyers ”, synthesized the Times.

Global capitals (especially Russian, Chinese and Saudis) took advantage of the 2008 crisis to buy in cash and at a lower price, while New Yorkers had no credit.  (Grosby)

Global capitals (especially Russian, Chinese and Saudis) took advantage of the 2008 crisis to buy in cash and at a lower price, while New Yorkers had no credit. (Grosby)

First the China’s economic growth slowed; then oil prices fell, which affected the Russian and Middle Eastern millionaires. And when the United States Department of the Treasury began to pursue the money laundering through luxury real estate, developers faced a trade-off: lower prices or wait. And they preferred do not reduce the values.

The result is a surplus unsold luxury condos: Only in January, according to the newspaper, apartments were added to the offer that, at the current rate, are equivalent to six years of operations, which is twice the usual term. The $ 5 million to $ 10 million market is saturated, to the point where some buildings offer planes rent-to-own (lease with option to buy), a very rare option in that range.

At the same time, prices were also high in other types of housing: In the decade ending in 2019, there was on average one duplication of values ​​in most neighborhoods of Brooklyn, including Prospect Heights y Williamsburg; some sectors, like Cobble Hill, they came to register a triplication. With rent increases – as in Williamsburg, an example of gentrification– up to 54%, began a phenomenon of depopulation: the metropolitan area of ​​New York loses about 300 residents per day, according The Atlantic.

There is currently a surplus of unsold luxury condos in New York - the $ 5 million to $ 10 million market is saturated (AP / Bebeto Matthews)

There is currently a surplus of unsold luxury condos in New York – the $ 5 million to $ 10 million market is saturated (AP / Bebeto Matthews)

Meanwhile, the mayor Bill De Blasio, which campaigned on affordable housing, has been unable to push through changes to zoning regulations or encourage the construction of small units. The Times speculated that, given the paradoxical situation of a middle class squeezed into small apartments and many empty luxury units, the new decade will change the profile of construction to orient you towards the needs of local residents.

The analysis of The Atlantic stressed that, regardless of what happens in the immediate future, the empty skyscrapers of New York City are of enormous importance because the city ​​reflects the housing market of the entire United States. First, he compared the text, “the typical new single-family home has become surprisingly luxurious”: in the last 50 years the surface area per resident has doubled, the number of bathrooms per construction has increased, and new homes are among the largest in the world. “The mansions of the ’70s would be the typical new houses of the 2020,” he illustrated.

Second, as the property became more luxurious, the access to shopping also became a luxury. “Young adults today have one third less likely to own of a house than previous generations, ”the article stressed. Social issues add difficulties: in the case of young people african american, the property has reached its lowest point in the last 60 years.

With many empty luxury units, construction in New York could be geared towards local buyers in the new decade.  (REUTERS / Mike Segar)

With many empty luxury units, construction in New York could be geared towards local buyers in the new decade. (REUTERS / Mike Segar)

Third, more expensive markets, such as San Francisco, Los Angeles, and New York, they have not built enough houses for the middle class, which generated a move to the suburbs. “This is a great loss, because denser cities offer better opportunities for companies and workers. Instead of growing as they get richer, New York, Los Angeles, and San Francisco shrink. “

Finally, in general the construction of houses has not kept pace with population growth. “Sales of single-family units are stagnant at the levels of 1996, although the United States has added 60 million people —Or two states of Texas— since the mid-’90s, “he concluded The Atlantic. “This explains why people tend to move less, why social mobility has fallen, why regional inequality has increased”, among other factors.

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