New York's luxury real-estate market has been in freefall for years, and now the city's super-luxe buildings are sitting empty — even as property prices in the city remain stubbornly high, prompting 300 New Yorkers to move out of the city every day, and filling the homeless shelters to capacity and beyond.
New York — like most overpriced cities — has failed to build enough low- and middle-income housing of the sort that people use to live in, and has grossly oversupplied itself with the kinds of safe deposit boxes in the sky that oligarchs use as a form of medium-term asset class, possibly without ever occupying it.
The luxurification of cities isn't an accident. When Michael Bloomberg was mayor of New York, he explicitly encouraged "bluelining" — designating whole regions as luxury-only, aimed at the global super-rich — saying that he wanted New York City itself to be viewed as a luxury good.
The problem with this plan — apart from it being an inhumane form of ethnic cleansing that chases working people out of our cities — is that it only works if there are enough global oligarchs chasing these super-luxe condos to keep the market inflated and liquid (oligarchs have viewed luxury property in big cities as being nearly as liquid as cash, because for a time, you could flip them on just a few days' notice).
But three of the most important centers of oligarchic capital have dried up: China instituted strict currency controls and its economy is slowing, and Saudi and Russian oligarchs are much less flush than they were when oil prices were at their peaks.
The result is a death-spiral for super-luxe property: as bidders dry up, more oligarchs decide that real-estate isn't basically a form of cash that you can spend a weekend in from time to time, and put their properties on the market. The supply increases, driving down prices, and that prompts more absentee owners to list their properties, hoping to get out before the market craters altogether. Meanwhile, property developers have new units coming into the market, and resort to bulk-sales to investment trusts, or simply buying the units themselves in a paper shuffle meant to inflate prices.
It's not just New York, of course — London's going through the same process, accelerated by Brexit.
It would be funny if it wasn't for the housing priorities that languished while the world's Bloombergs were remaking our cities into investment opportunities instead of places to live and work. New York's got 80,000 people living in shelters or sleeping on the streets. Los Angeles has so many homeless people that it distorts the national average, and it's creating a public health crisis as typhus spreads through the sprawling, semi-permanent homeless camps.
San Francisco is in the fourth decade of its homelessness crisis with no end in sight: efforts to do something about the crisis have been sabotaged by corporate money from Lyft and Stripe; the city spends $65m/year just cleaning up human shit (but only allocated $3.1m/year to providing toilets); and local vigilantes punish the homeless rather than demanding a fix from the city.
A decade ago, a housing bubble was weaponized to destroy the entire world economy, kicking off instability and chaos that we're still living through to this day. And yet, our governments at all level are insisting that it's up to the market to supply low-income housing, while our neighbors are left to sleep and shit and die in the streets, in the shadows of empty super-luxe buildings that not even plutes want anymore.
From any rational perspective, what New York needs isn't glistening three-bedroom units, but more simple one- and two-bedroom apartments for New York's many singles, roommates, and small families. Mayor Bill De Blasio made affordable housing a centerpiece of his administration. But progress here has been stalled by onerous zoning regulations, limited federal subsidies, construction delays, and blocked pro-tenant bills.
In the past decade, New York City real-estate prices have gone from merely obscene to downright macabre. From 2010 to 2019, the average sale price of homes doubled in many Brooklyn neighborhoods, including Prospect Heights and Williamsburg, according to the Times. Buyers there could consider themselves lucky: In Cobble Hill, the typical sales price tripled to $2.5 million in nine years.
This is not normal. And for middle-class families, particularly for the immigrants who give New York City so much of its dynamism, it has made living in Manhattan or gentrified Brooklyn practically impossible. No wonder, then, that the New York City area is losing about 300 residents every day. It adds up to what Michael Greenberg, writing for The New York Review of Books, called a new shameful form of housing discrimination—"bluelining."
Why Manhattan's Skyscrapers Are Empty [Derek Thompson/The Atlantic]