WSJ: Europeans Not Buying NYC RE

The article offers no proof and relies on annectdotes. This is journalism? fluff piece.

Did you read it?

Of course not.

Quotes from four market participants. Maybe they're lying, maybe they're not.

Riversider - answer me this: what effect do the following have on purchasing power and aggregate demand?

(i) Declining currency
(ii) Sustained economic downturn
(iii) Imposed economic austerity programs (entitlement reductions)
(iv) Increased taxation (i.e., bankers bonuses/compensation caps) on the wealthy
(v) Tight credit markets.

I'll give you a hint. The answer is not "Increased demand from Irish carpenters for overpriced condos in an expensive currency!!"

If you can answer the question accurately, the article will make sense to you.

"Brokers worry that some Europeans who bought New York property near the peak and took a hit of 20% to 30% may have made enough back in currency appreciation to cancel out investment declines. That break-even point could trigger sales among some of these owners, putting more supply on the market. "

This should be a worry for everyone in new condos. If foreigners are looking at the bottom line and did not buy in 2008 but 2005-6, they have a profit that they may consider cashing in. Considering that the euro can go down another 10-20% within a few months, more Europeans will see this choice as optimization of their investment.

I have had several Europeans, South Americans(Brazil) and Chinese looking at my studio these past 2-3 weeks.

The Europeans have been Italians.

SteveF - replace "looking at" with "looking into" and I might believe your first comment.

The Chinese buyers are showing up the most.

The last paragraph hits to the entire point, that no longer will you see middle class Spaniards and Irish Carpenters buying up $800k studios in poorly constructed condos on Wall street. For those who are buying $5 million places all cash, then yes, they may very well be more inclined to put their money into Manhattan RE. Only time will tell.

Hey Riversider, riddle me this. How does a European justify covering monthly maintenance and taxes that are in USD? That $2,000 monthly which cost $1,250 at $1.60 Euro suddenly costs $1,666 at $1.20 Euro.

In reality, I'm sure that most don't even think about their monthlies which makes Europoean investors no different than most US buyers...

It is a poorly written article which offers no substantiation for it's opinions.

RS: It is very telling that they quoted reps from two large development --Setai Fifth Ave and Trump Soho for mid range buyers and Dolly Lenz for up scale. If I were a buyer those quotes as well as the indisputable fact that the euro is in trouble would give me pause. What kind of substantiation are you looking for? Foreign buyers as a segment of NY RE are not tracked.

Someone would need to track actual purchases..

Interesting story on Calculated Risk poking holes in a reported 23% rise in southern cal. real estate prices (yoy) I think. Basically the anlaysis looked at median home prices and ignored changing product mix. The established metrics do not show such a large rebound.

Maybe the Europeans are buying in droves in Manhattan so they have a place to escape to when The Big War starts in the Europe. Maybe it's not about the carpentry.

alanhart..not funny. God forbid.

I agree wholehartedly -- not funny at all.

But the Europeans hate each other.

People from other countries DO BUY real estate in the United States as a "safe investment" in case all hell breaks loose in their home country. This has been true of many countries. The returns might be better elsewhere, but a peson knows they won't lose their NYC condo if they pay the bills.

Proof?

Anecdote?

Or just your usual?