Tag Archives: New York City

New York City Is Dead And It’s “Only Going To Get Worse”

Former hedge fund manager and entrepreneur James Altucher says New York City is dead and it’s not coming back.

Born and bred in New York, Altucher took his family and fled to Florida after the Black Lives Matter riots in June when someone tried to break into his apartment.

Since then, the city has continued to suffer a huge surge in shootings and violent crime as well as an anemic financial recovery from the coronavirus lock down.

Appearing on Fox News Business, Altucher referred to images that were broadcast during the interview showing 6th avenue to be virtually empty.

“We have something like 30 to 50 per cent of the restaurants in New York City are probably already out of business and they’re not coming back,” he pointed out.

Altucher said that despite offices in midtown being allowed to be open, they’re still largely empty because companies like Citigroup, JP Morgan, Google, Twitter and Facebook are encouraging their employees to work remotely from home “for years or maybe permanently.”

“This completely damages not only the economic eco-system of New York City…but what happens to your tax base when all of your workers can now live anywhere they want to in the country?” asked the entrepreneur, noting that many were fleeing to places that are cheaper to live like Nashville, Austin, Miami and Denver.

Warning that the situation was “only going to get worse,” Altucher said that the old New York was not coming back and that creative and business opportunities would now be dispersed throughout the entire country.

“What makes this different now is bandwidth is ten times faster than it was in 2008 so people can work remotely now and have an increase in productivity,” he added.

As we document in the video below, the blame for all this lies firmly at the feet of two people, Governor Cuomo and Mayor de Blasio.

Source: by Paul Joseph Watson | ZeroHedge

When Half Of NYC’s Tax Base Leaves And Never Comes Back

Without anyone left to pay for the city, the Big Apple is headed for a failed state.

The separateness in New York, and by extension much of the nation curled around it from America’s eastern edge, stands out. There are the hyper-wealthy and there are the multi-generational poor. They depend on each other, but with COVID who needs who more has changed.

It’s easy to stress how far apart the rich and the poor live, even though the mansions of the Upper West Side are less than a mile from the crack dealers uptown. The rich don’t ride public transportation, they don’t send their kids to public schools, they shop and dine in very different places with private security to ensure everything stays far enough apart to keep it all together.

But that misses the dependencies which until now have simply been a given in the ecosystem. The traditional view has been the rich need the poor to exploit as cheap labor—textbook economic inequality. But with COVID as the spark, the ticking bomb of economic inequality may soon go off in America’s greatest city. Things are changing and New York, and by extension America, needs to ask itself what it wants to be when it grows up.

It’s snapshot simple. The wealthy and the companies they work for pay most of the taxes. The poor consume most of the taxes through social programs. COVID is driving the wealthy and their offices out of the city. No one will be left to pay for the poor, who are stuck here, and the city will collapse in the transition. A classic failed state scenario.

New York City is home to 118 billionaires, more than any other American city. New York City is also home to nearly one million millionaires, more than any other city in the world. Among those millionaires some 8,865 are classified as “high net worth,” with more than $30 million each.

They pay the taxes. The top one percent of NYC taxpayers pay nearly 50 percent of all personal income taxes collected in New York. Personal income tax in the New York area accounts for 59 percent of all revenues. Property taxes add in more than a billion dollars a year in revenue, about half of that generated by office space.

Now for how the other half lives. Below those wealthy people in every sense of the word the city has the largest homeless population of any American metropolis, which includes 114,000 children. The number of New Yorkers living below the poverty line is larger than the population of Philadelphia, and would be the country’s 7th largest city. More than 400,000 New Yorkers reside in public housing. Another 235,000 receive rent assistance.

That all costs a lot of money. The New York City Housing Authority needs $24 billion over the next decade just for vital repairs. That’s on top of a yearly standard operating cost approaching four billion dollars. A lot of the money used to come from Washington before a multi-billion dollar decline in federal Section 9 funds. So today there is a shortfall and repairs, including lead removal, are being put off. NYC also has a $34 billion budget for public schools, many of which function as distribution points for child food aid, medical care, day care, and a range of social services.

New York’s Governor Andrew Cuomo has seen a bit of the iceberg in the distance. He recently took to MSNBC to beg the city’s wealthy, who fled the coronavirus outbreak, to return. Cuomo said he was extremely worried about New York City if too many of the well-heeled taxpayers who fled COVID decide there is no need to move back.

“They are in their Hamptons homes, or Hudson Valley or Connecticut. I talk to them literally every day. I say. ‘When are you coming back? I’ll buy you a drink. I’ll cook. But they’re not coming back right now. And you know what else they’re thinking, if I stay there, they pay a lower income tax because they don’t pay the New York City surcharge. So, that would be a bad place if we had to go there.”

Included in the surcharge are not only NYC’s notoriously high taxes. The recent repeal of the federal allowance for state and local tax deductions (SALT) costs New York’s high earners some $15 billion in additional federal taxes annually.

“They don’t want to come back to the city,” Partnership for NYC President Kathryn Wylde warned. “It’s hard to move a company… but it’s much easier for individuals to move,” she said, noting that most offices plan to allow remote work indefinitely. “It’s a big concern that we’re going to lose more of our tax base then we’ve already lost.”

While overall only five percent of residents left as of May, in the city’s very wealthiest blocks residential population decreased by 40 percent or more. The higher-earning a neighborhood is, the more likely it is to have emptied out. Even the amount of trash collected in wealthy neighborhoods has dropped, a tell-tale sign no one is home. A real estate agent told me she estimates about a third of the apartments even in my mid-range 300 unit building are empty. The ones for sale or rent attract few customers. She says it’s worse than post-9/11 because at least then the mood was “How do we get NYC back on its feet?” instead of now, when we just stand over the body and tsk tsk through our masks.

Enough New Yorkers are running toward the exits that it has shaken up the greater area’s housing market. Another real estate agent describes the frantic bidding in the nearby New Jersey suburbs as a “blood sport.” “We are seeing 20 offers on houses. We are seeing things going 30 percent over the asking price. It’s kind of insane.”

Fewer than one-tenth of Manhattan office workers came back to the workplace a month after New York gave businesses the green light to return to the buildings they ran from in March. Having had several months to notice what not paying Manhattan office rents might do for their bottom line, large companies are leaving. Conde Nast, the publishing company and majority client in the signature new World Trade Center, is moving out. Even the iconic paper The Daily News (which published the famous headline “Ford to City: Drop Dead” when New York collapsed in 1975 without a federal bailout) closed its physical newsroom to go virtual. Despite the folksy image of New York as a paradise of Mom and Pop restaurants and quaint shops, about 50 percent of those who pay most of the taxes work for large firms.

Progressive pin-up Mayor De Blasio has lost touch with his city. After years of failing to address economic inequality by simply throwing free money to the poor and limiting the ability of the police to protect them, and us, from rising crime, his COVID focus has been on shutting down schools and converting 139 luxury hotels to filthy homeless shelters. Alongside AOC, he has called for higher taxes on fewer people and demanded more federal funds. As for the wealthy who have paid for his failed social justice experiments to date, he says “We don’t make decisions based on a wealthy few. Some may be fair-weathered friends, but they will be replaced by others.”

What others? The concentration of major corporations once pulled talent to the city from across the globe; if you wanted to work for JP Morgan on Wall Street, you had to live here. That’s why NYC has skyscrapers; a lot of people once needed to live and especially work in the same place. Not any more. Technology and work-at-home changes have eliminated geography.

For the super wealthy, New York once topped the global list of desirable places to live based on four factors: wealth, investment, lifestyle and future. The first meant a desire to live among other wealthy people (we know where that’s headed), investment returns on real estate (not looking great, if you can even find a buyer), lifestyle (now destroyed with bars, restaurants, shopping, museums, and theaters closed indefinitely, coupled with rising crime) and…

The future. New York pre-COVID had the highest projected GDP growth of any city. Now we’re left with the question if COVID continues to hollow out the city, who will be left to pay for New York? As one commentator said, NYC risks leading America into becoming “Brazil with Nukes,” a future of constant political and social chaos, with a ruling class content to wall itself off from the greater society’s problems.

Source: by Peter Van Buren | The American Conservative

Over Half Of Houses Listed In NYC Last Year Never Sold

A torrid post-crisis recovery in the NYC housing market came to a screeching halt last year as a chasm opened between what sellers were asking and what buyers were willing to pay.

https://ap.rdcpix.com/238832139/34d0af005e3bf18106be433233553738l-m0xd-w1020_h770_q80.jpg

But in the clearest post-mortem showing just how bad last year was for one of the world’s most unaffordable real estate markets, Property Shark found in a recent analysis that less than half of the housing inventory available sold last year. According to PS, 48% of the homes listed between March through May of last year had been sold as of Feb. 1.

It’s a symptom of New York’s softening market, where a glut of inventory has given buyers major bargaining power, said Grant Long, senior economist for StreetEasy. Of the homes that didn’t sell, only 14% are still listed. But most of the homes that were pulled off the market could easily reemerge

And of the homes from last spring that did sell, roughly 70% of them closed for less than their owners initially sought. That’s up from 62% of sales a year earlier and 61% in 2016.

The resulting glut in unsold inventory is creating problems for sellers who are facing another tidal wave of inventory.

https://www.zerohedge.com/s3/files/inline-images/Screen%20Shot%202019-02-08%20at%203.01.50%20PM.png?itok=xc33bN-d

Here’s a breakdown of the report’s findings (text courtesy of Property Shark):

1. Of All Homes Listed for Sale in Spring 2018, Fewer Than Half Sold

Just 48 percent of the homes listed during March, April, and May 2018 had sold as of February 2019. While weakness at the top of the NYC sales market has been grabbing headlines, the sluggish pace of sales has extended to homes across boroughs and price points. Manhattan homes fared slightly worse than others, with just 44 percent selling, but even in the comparably strong market in Queens, just 54 percent of homes found buyers. This is not only about price: Though 61 percent of all homes listed for $1 million or more failed to sell, so did 45 percent of all homes priced under $1 million. (Nonetheless, units priced at or above $5 million fared far worse, with just 140 of 656 units, or 21 percent, finding buyers.)

The Greenwich Club condominium in the Financial District exemplifies this trend. A total of 31 units in the building were listed for sale in March, April, and May 2018, but only six have sold. One more entered contract in December, and another six have since relisted, but many — including a 1-bedroom asking $1.25 million, 25 percent above its 2016 purchase price — left the market without fanfare in late 2018.

2. Many Homes Listed Last Spring Were Taken Off-Market

Most sellers who were unable to find buyers at suitable prices have simply pulled their listings from the market. Of all listings created in spring 2018, 40 percent are either paused, delisted, or otherwise no longer available on StreetEasy. Only 7.5 percent of all the listings from the peak months, or 14 percent of the total unsold units, are still actively seeking buyers. Listing agents marked another 4.5 percent of homes as in-contract, with the majority entering deals in late 2018 and presumably closing in early 2019. Yet with many more unsold, we will likely continue to see heightened inventory heading into the spring home-shopping season, as these sellers try again to find a buyer.

3. The Majority of 2018 Sales Closed Below Asking Price

Of homes listed last spring that managed to find a buyer, we estimate that 70 percent closed below their initial asking price[1]. The median difference between the recorded closing price (as reflected in public records) and the initial listing price on StreetEasy was 5.5 percent, for a $44,000 discount off the $800,000 median listing price for homes sold. Buyers enjoyed particularly high negotiating power in Manhattan, where 77 percent of homes sold below their initial asking price, compared to 68 percent of homes in Queens and 61 percent of homes in Brooklyn.

Homes selling below their initial asking price is not a new phenomenon, but with heightened competition for buyer interest, spring 2018 was particularly painful for sellers. In 2017 and 2016, 62 and 61 percent, respectively, of homes listed in the spring sold below ask in a comparable time period.

4. Aggressively Priced Homes Stand Out

Though these numbers make selling a home seem daunting, a significant chunk of homes – 19 percent of all sales – closed above their original asking price. While these home sales ranged across price points and neighborhoods, they tended to be among the cheapest in their respective neighborhoods for their bedroom count. Homes that ultimately sold above ask were initially listed for a median of 8.8 percent below the respective 2018 median price for their neighborhood and bedroom count. Meanwhile, homes that sold below asking price were listed a median of 1.2 percent above the respective median for their neighborhood and bedroom count. Homes that went unsold were initially listed for a median of 6.4 percent above their respective benchmark median.

* * *

To be sure, the property glut has given buyers serious bargaining power. And while sellers are hoping for a rebound (particularly if Trump does manage to repeal the SALT deduction cap, which the Senate has already said won’t happen), with more inventory set to hit the market, the downturn could persist for some time, particularly with median home values still well above the range that NYC’s population of indebted, cash-poor millennials are willing/able to pay.

Source: ZeroHedge