Back HomeThe Effect of Market Instability on New York Real Estate
The Real Estate market, anywhere, can be a tough investment in times of instability and transition.
Ari Harkov of the New York Daily News writes that “the key is to focus on the math and to put aside the emotional pain we all feel when we see our properties go down in value” (1). If you can afford to upgrade your existing apartment, that is bettter off in the long run for your investment. Hypothetically, if the market was down an overall 10%, that million dollar property of yours is only worth $900,000. However, if you were upgrading to a 2 million dollar property, that would be sold for 1.8 million. The difference is $100,000 of value (or more, if you offer lower than market and the sellers accept).
“The stability and strength of New York real estate, as compared with the volatility of other asset classes, is one of the many reasons why so many buyers from around the U.S. and the world have chosen to purchase homes and investment properties in the city, and those who have tended to do the best have often purchased during periods of uncertainty” (1).
And speaking of periods of uncertainty and stability, the New York City Real Estate market is looking far more attractive than the London market to foreigners. Just this morning, the United Kingdom voted in favor of leaving the European Union during the Brexit vote, which not only affects the European economy, but the New York City real estate market as well. Here are the “after – effects” of the decision:
1. The low interest rates will make New York City apartments a continued attractive investment for foreigners and domestic investors alike and it makes it easier to finance the investment.
2. New York City real estate now becomes the primary market to invest in, due to the collapsing value of the pound against the US dollar.
3. All assets including real estate have become an attractive and safer investment. “New York real estate (both commercial and residential) is widely considered one of the safer investments — BlackRock’s Larry Fink recently described it taking over gold’s traditional role as an “instrument for the storing of wealth” (2).
4. Commercial real estate and office space leasing in New York City will soar. ““Too many things are “TBD” in London right now, so NYC office, multifamily and high street retail will likely benefit from even more capital flows,” wrote Daniel Parker of Hodges Ward Elliott” (2).
Conclusively, until there is visibly and proven stability in the London Real Estate Marketing, New York City will be a continued wise investment for locals and foreigners alike.
(2) The Real Deal
