For the first time in decades, real estate in Manhattan is in a downturn. Though in the 1970s and 1980s New York City was considered dangerous, the last 25 years have seen almost nothing but recovery. A big part of that recovery has been real estate.
For years, the prices of real estate in New York have been skyrocketing. During the 1980s and early 1990s, people were able to buy cheap. Even in desirable areas like the Flatiron district, apartments were affordable. That all changed in the second half of the 1990s. Real estate prices began to climb as crime went down and entrepreneurs flocked to the city. Aside from the 2008 recession, the recovery was mostly unabated. The 2010s saw nearly unprecedented real estate prices and development. Luxury apartments in the Central Park area were big news.
For the past six quarters, however, real estate sales have slowed in Manhattan. Part of this is due to a new “mansion tax,” which hits people who own homes worth over one million dollars. This is big news. In Manhattan, one million dollars will hardly buy a mansion. This new tax also neglects to consider the impacts of driving the upper and middle classes from the city.
If investments are leaving the city, it will have other impacts. A slowdown in New York City real estate is concerning not only for that sector of the economy. A hot real estate market means people are coming to the city. Whether that’s for work, retirement or vacation, everyone benefits. Restaurants, theaters, schools, museums, and doctors all benefit from a healthy real estate market. Though there have been some big purchases recently, like Ken Griffin’s big condo buy, these are the exception, not the rule. As the prices at the top move down, so do prices in the middle and at the bottom.
A slowdown in real estate is worrisome. Recent political pressures have forced companies like Amazon to reconsider expansion there. A healthy middle class is generally needed to keep the service economy healthy. Skilled workers create employment for less skilled workers. A decrease in upper and middle-class residents means fewer nannies, dog walkers, and baristas. This real estate slowdown will eventually impact everyone in the city, and working people most of all.
About The Author
Jack Nourafshan is a distinguished real estate development professional and entrepreneur in Los Angeles, California. He is the President of Reliable Properties, a real estate acquisition, development and management company in the Los Angeles area. Jack has over 30 years of professional experience that has made him known as a leader in the industry. Jack Nourafshan started a blog on entrepreneurship to share his insight and experiences for aspiring entrepreneurs.