The Long Crisis

Manhattan’s luxury real estate market is joining the national downtrend in real estate prices as Wall Street layoffs and tight credit squeeze demand. Luxury market real estate brokers sadly say that prices could tumble another 30% to 50% before recovering.

Compared to other US major markets the luxury Manhattan real estate market had held up fairly well until recently. One reason the Manhattan market boomed during the early 2000’s was the huge salaries, bonuses, and fees paid to hedge fund managers and to financial industry executives and top Wall Street sales people. Then there were the suddenly rich Russians and other foreigners willing to pay top Dollar for real estate as commodity prices, especially oil prices, boomed.

All that now seems to be in the distant past as boom turns into bust worldwide and even people who are still wealthy by any standard are becoming frightened about what the future may bring. Prices on expensive properties are now being drastically slashed, yet few buyers are to be found.

Real estate brokers are notorious cheerleaders for the real estate market and of course are still talking about an eventual recovery. Unfortunately, while most people do not realize it yet, or in a state of denial even if they do, the convergence of three disasters during the first 15 years of the 21st century may prevent a recovery in Manhattan real estate. Ever.

During our lifetimes the convergence of a long crisis in world financial markets, along with climate change and as a consequence of peak oil vital energy shortages, may make comfortable big city living all but impossible. For example, who would want to walk down 35 stories from a penthouse apartment, travel along dirty, dark, dangerous and gang infested city streets to visit a grocery store with bare shelves, and then return to a home with no heat or air conditioning, then have to walk up 35 floors?

How much would you want to pay to own that 35th floor Manhattan luxury penthouse condominium apartment?

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