I started reading this article in the Atlantic, and I kept waiting for the bad news. The summary of the article is that there is a lot of extremely high priced apartments in NYC that can’t be sold, and a huge need for middle class housing in the City. This makes it sound like there is a horrible problem here. Do you see this from the same perspective that I am seeing this? The author laments how rich foreigners can no longer afford to buy into the glut of expensive apartments in NYC. All I kept thinking was who is going to take the opportunity to buy into the market and make money selling apartments that the middle class can afford?
Look I am no babe in the woods, and I am well aware of the reality of the situation. The Projects in NYC were built as low and middle income housing. I know this, because my father moved from old tenements to one project in Canarsie Brooklyn in the early 1950s. My grandparents lived there until they retired to Florida in the late 1970s. I know there is less money in that than in the grand palaces for the rich and famous. That being said, there is plenty of money to be made in places like Levittown.
The fact is that these luxury apartments will not cause a downturn in the housing market as the author implies. There is a huge need for housing in NYC, and likely other great cities. I know NY, and feel comfortable speaking about it. All that will happen here is that the prices will go down, and the extra supply will be sucked up until it goes up again. In the meantime, someone needs to build middle income housing. The real question that should have been asked is why isn’t anyone doing that? In NYC, I would speculate that regulation, speculation, and unions are factors in the problem. All 3 raise prices, especially in NY. And again, before you get going on me about unions, my father was in 2 for his whole working career post his time in the military. Unions can be good, but the current state of them in NY is ridiculous. Check out the abuses of transit union workers. I think $469k in overtime is a bit much for one guy, and it’s the NY Times that says so. Here’s a hint, my old man was in that union for a number of years, his second, and was disgusted by what he saw. You don’t have to be a Republican or a Democrat to be disgusted by waste of tax money.
So what do you think? Am I nuts here?