Stronger Dollar + declining RE prices = No More overseas buyers

One year ago, the dollar was 1.35 or so to the euro and now it is 1.55 or so. Thats a 13% difference. So the dollar would still have to strengten 13% to get to where it was last year and last year overseas buyers were very active in NYC

shamrock:

The flipside to that view is:
- Europeans have heard nothing but bad news from USA for the past year. All they hear about is subprime this and that + huge layoffs in wallstreet
- If the dollar continues its strength, they see the slow bleed and. **If** dollar stays below 1.50, the Europeans may see the party as being over. If any Europeans bought when it was above 1.50, it will be their version of the Exploding ARM reset.

"One year ago, the dollar was 1.35 or so to the euro and now it is 1.55 or so. Thats a 13% difference. So the dollar would still have to strengten 13% to get to where it was last year and last year overseas buyers were very active in NYC"

completely not true, if the dollar strengthens and the Manhattan RE market declines this gain will dry up very quickly, bring on sells sooner than later..and it will not be a slow bleed...the sword cuts both ways, overseas buyers had it great with a weak dollar/ strong re market....conversely when the trade flips, it will be a bloodbath for them, not to mention their economies are doing that great either

Uhhh actually if Europeans believe the dollar will appreciate 10-20% that would make now exactly the RIGHT time to buy, as their investment will appreciate by that amount in their own currency without a single dollar of appreciation of the underlying investment (ie the apartment). If the dollar strengthens to 1.25 (a huge move to shamrock's point but certainly not an impossible one) that would still be a historically weak level for the dollar and a european buyer would have been hedged againt a 20% drop of the value of the apartment. Bottom line I think the strengthening dollar theme is going to create a huge incentive for foreign buyers to buy in Q2 and early Q3

guys,
real estate prices never go down.
if the dollar is weak, foreigners will buy because real estate is cheap.
if the dollar is strong, foreigners will buy because they are scaerd they'll get priced out.

all in all, nobody ever sells apartments in manhattan - they only buy. no wonder prices tend to double every year, and are projected to do so unto eternity.

"Bottom line I think the strengthening dollar theme is going to create a huge incentive for foreign buyers to buy in Q2 and early Q3 "

this assumes offshore investors already have their assets already denominated in dollars...go find a european that is in the dollar or even willing to be in the dollar, they laugh at the dollar and would not dream of putting any assets in the dollar...

The Europeans have treated Manhattan as a second home market. In many ways the same as Manhattanites look at the Hampton's. Make no mistake about it, if the Europeans feel the pinch, their second homes which happen to be in Manhattan will be the first to go. Just like the wallstreet crew.

Your math is upside down dco. A european who bought 2 yrs ago with the euro at 1.25 is 24% UNDER WATER from his currency standpoint with the euro now at 1.55. Now if the trend reverses (ie the dollar finally strengthens) that is a POSITIVE for european buyers who at the end of the day only cares about retunrs in their own currency.
So your argument that a strengthening dollar is negative for the NYC market is incorrect. As a matter of fact it is exactly the opposite.

spieler- Look at my post. Where did I say anything about the dollar? My theory is not based on the dollar. I said if they begin to see things tightening. ( ie lose job, slowing economy over extended) they will look to get ride of an asset they can no longer afford. Just like the wallstreet warriors have begun dumping their Hampton homes.