New York City Setting New Records
The Federal Reserve should stick to what it does best… Unfortunately, what it does best is highly questionable, given the state of our “growing” and “stable” economy teetering on the brink of insanity.
We know for a fact the Fed has a hard enough time being right about bubbles where bubbles don’t even exist…
Janet Yellen learned that the hard way after explaining that biotech was in a bubble soon to burst. Yet she never accounted for the 80 million baby boomers, new medical technologies, or even new healthcare laws.
Then, she decided to say commercial real estate is in a bubble. I still find it funny.
But in the weeks that followed that ridiculous statement, commercial real estate continues to boom. In fact, the New York City real estate market is showing very little signs of a deflating bubble.
Sales volume is on pace, according to the New York Daily News, to exceed $75 billion by the end of this year. That’s a 30% year over year improvement and an all time record high for the city. Brooklyn alone could see $9 billion in deals for 2015, a 30% increase year over year.
The previous record for sales volume was $62.2 billion in 2007 before things became a disaster.
Housing market research firm, Axiometrics found that the average rental price in the New York area is now up to $3,015 during June 2015. That’s up $114 more than the average a year ago.
But it gets even better…
As we’ve long discussed, Chinese investors are still flocking to New York City, buying some of the most iconic buildings at unbelievable prices. For 2015 so far, Chinese investors have spent more than $3.8 billion on Manhattan properties – a threefold increase over 2014.
In many cases, these investors are paying a significant premium over competitors. They’re betting the property is worth more than the highest quality assets, notes the New York Daily News, proving once again that timing is more important than price.
Nice call, Ms. Yellen. Nice call. Too bad it’s just as wrong as the biotech call.