The New York Times reports:
The luxury market has been strong for some time, but it exploded in the first quarter, with prices jumping 45 percent to an average of $7.4 million from $5.1 million, according to data from the appraisal firm Miller Samuel. That is the largest year-over-year increase in six years. Driving the market has been a staggering lack of inventory. Just 174 new condominium units came to market in Manhattan in the first quarter, a 73 percent drop from the first quarter of 2013, when there were 640 new units, according to data from the Corcoran Sunshine Marketing Group. In all of 2013, there were about 2,500 new condominiums, a nearly 70 percent decrease from the roughly 8,000 new units at the height of the last real estate cycle in 2007.
And what has been coming on the market has been in boutique buildings with fewer than 50 apartments. In the first quarter, the 174 new units were spread across just 11 buildings, all of them with 35 or fewer apartments. In fact, since 2007, the average size of new buildings has shrunk by more than half, with an average of 38 units per building this year, compared to 80 units in 2007, according to data from Corcoran Sunshine. While there may be fewer and smaller buildings, the average apartment size in new condo developments has grown by around 23 percent. Perhaps reflecting the rising number of families choosing to stay in New York, the average size apartment now reaches 1,560 square feet, compared with 1,265 square feet in 2007, Corcoran Sunshine data show. “The velocity of sales has been historic,” said Kelly Kennedy Mack, the president of Corcoran Sunshine. “That is because so few properties were introduced to the market over the last couple of years, so there is a lot of pent-up demand.”
I don’t care what rich people want to do with their money. If they want more expensive condos then that is their business. No one should resent their wealth or leverage that resentment to get popular support for unequal taxation.
But, make no mistake: this story is about how our elites prosper on the backs of mainstream suffering. They especially hurt those who live on fixed incomes as the prices of food and energy go up.
The Federal Reserve considers two percent inflation a goal, not a curse. In so doing, they consign all those who live on a fixed income to perpetual impoverishment and suffering. But they don’t care because the job of the Federal Reserve is to keep the financial class rich. Thus, places like New York City experience luxury real estate booms in the midst of ongoing “quantitative easing.”
As George Will wrote in December 2013, the Federal Reserve monetary policy that Barack Obama favors
— very low interest rates, driving money into equities in search of higher yields — is a powerful engine of inequality. Since the Dow closed at 7,949 on Inauguration Day 2009, it has doubled , benefiting the 10 percent who hold 80 percent of directly owned stocks.
These ten percent are concentrated in New York City and a few other urban centers. So the real estate agents who service them are also making money.
As James Grant explained about the effect of the Federal Reserve’s quantitative easing on another urban center,
Five years, and they are conjuring $85-billion-a-month, with which to buy securities, with which to enrich Greenwich, Connecticut, even more. This is what it is. This is the policy of the one-tenth of one percent.
So the next time you hear stories of a senior citizen unable to afford his rising energy bill or buy enough groceries, remember it is directly connected to those luxury condos.