Manhattan Apartment Prices Soar To Record On Billionaire Bid

Three weeks ago in “Beef Prices Hit Record: Up 30% In The Past Two Years,” we noted that although the Fed may continue to claim inflation is non-existent, for those Americans who can't afford a house and thus have to rent, inflation is all too real.

The soaring cost of housing is a topic we’ve covered extensively and indeed, as we showed in “America’s Housing Problem: Buying And Renting Are Both Unaffordable,” many Americans face the rather harrowing prospect of not being able to afford a downpayment (even at the token 3% level now allowed by Fannie and Freddie) while facing an inexorable rise in rents, meaning, in WSJ’s words, that many households are“stuck between homes they can’t qualify to purchase and rentals they can’t afford.” 

In the latest example of the soaring cost of living in America, Manhattan apartment prices just hit a record, with average sale prices leaping 11% to an astounding $1.87 million in Q2, the highest in the quarter or so century of record keeping.

 Bloomberg has more:

The average sale price of all co-ops and condominiums was $1.87 million, up 11 percent from a year earlier and the highest in 26 years of data-keeping, according to a report Wednesday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Resale apartments and units in new developments each set their own price records amid interest from both investors and buyers who intend to live in the homes.

 

Buyers clamoring to own property in Manhattan found few choices on the market, pushing them into bidding wars, especially for resale apartments. Listings totaled 5,730 at the end of June. While that’s up 1.3 percent from a year earlier, the inventory is still 20 percent below the 10-year average, according to Miller.

 

Resellers have been hesitant to list their homes because rising prices may leave them unable to trade up, Miller said. At the same time, developers adding new units to the market have focused on building ultra-luxury towers aimed at billionaire investors as a way of recouping their high land costs.

Yes, a boom in “ultra-luxury” units “aimed at billionaires”, a sure sign (not really) of a healthy market and further evidence that thanks to seven years of global QE and ultra-accommodative monetary policy that has served to balloon the assets of the wealthy, the super rich (and perhaps a few oligarchs) are now clamoring for ways to spend it all and once you’ve added to your $100 million home collection and bought a few Picassos at Christie’s, we suppose a luxury unit or two overlooking the New York skyline is just as good a place as any to park a few million. Here’s Bloomberg again:

The owners of a co-op at 360 W. 20th St. sold the property last month for $700,000 more than they were seeking after a bidding war broke out among 14 interested buyers, said Meris Blumstein, the Corcoran Group broker who sold the Chelsea property.

The sellers listed the renovated two-bedroom apartment near the High Line in March for $2.5 million, the lowest they were willing to accept. A month later, the unit, which includes a 650-square-foot (60-square-meter) yard and temperature-controlled wine storage for 240 bottles, went into contract with a buyer who agreed to pay $3.2 million.

Another seller in the neighborhood, Victor Vecchiariello, listed his West 23rd Street condo for $999,000, and attracted several bids at an open house held on a snowy day in March. On the advice of his broker, Scott Harris of Brown Harris Stevens, Vecchiariello held a second open house and ended up selling the 754-square-foot apartment for $1.28 million.

One or two of the bidders “might have said, ‘I’m going to step away,’” said Vecchiariello, a partner in Ernst & Young LLP’s tax division. “But most of them came back. They upped their offers a bit.”

So there you have it America, you are being priced out of homeownership by the bored billionaire crowd thanks in no small part to the lunatics in the Eccles Building who, if asked, will swear that any day now, the fabled "wealth effect" will finally begin to trickle down, and maybe then, you too will be able to afford to purchase a home or, at the very least, scrape together enough to pay rent on your one bedroom apartment which, as we've shown, may currently be a rather monumental task.