Luxe redux: New York’s high-end homebuyers return

Last spring, New York real estate agent James Kyog and his wife wanted to get closer to the sea. The couple, who brought their four children and a 13-year-old dog, sold their four-bedroom, 2,450-square-foot home in East Hampton, Long Island, for $ 1.6 million. And traded up to a 4,500-square-foot house in nearby Amnest for $ 2.2 million.

To execute the trade, which closed in May 2021, Keogh turned to cryptocurrencies, which he had begun trading about 18 months earlier. After paying capital gains tax, he used his atrium profits for 50 percent of the new home’s down payment, amounting to hundreds of thousands of dollars.

“So that I could come with a down payment while all my money was in my other house, I had to go to it [other] Places, “he says. So he turned to his digital wallet.

And Kao is not alone. Some brokers with whom the FT spoke reported an increase in the number of buyers looking to make money from their earnings in cryptocurrencies.

Cryptocurrency earnings gained during the plague are increasingly being used to buy luxury properties in Manhattan and Long Island (pictured) © Gavin Zeigler / Alamy

“[Last year] We saw the appearance of [the] Buys a particularly rich crypto, “says Garrett Dredrian, director of market intelligence at the brokerage company Serhant. He cites buildings like 432 Park Avenue, on what is called Manhattan A line of billionairesAs an example of a building that was popular with crypto buyers.

Sean Osher, CEO of brokerage Core, cites Rose Hill, a new development in Manhattan’s NoMad neighborhood, as popular with buyers who have made a package on crypto investments, and sometimes bought units over $ 20 million. “They want sexy high ceilings, stunning views [and] Great services, “he says.” Some of them lived in a studio apartment “two or three years ago and now they are looking for apartments with a” factor wow “.

“They want something no one else can get. They want something big – they want a penthouse,” says broker Ryan Serhant, who claims he was approached by about a dozen cryptocurrency investors who were not eligible for traditional loans.

Broker Tal Alexander says that he was also approached by buyers who wanted to spend the profits of their cryptocurrencies on homes in Miami. While most investors first convert their cryptocurrencies to cash (a transaction subject to capital gains tax) and then pursue traditional-format purchases, Miami – whose NBA team plays in an arena named after the FTX cryptocurrency exchange platform – is home to luxury coin-accepting developments Cryptographic directly. A penthouse at Arte, a building on Surfside, sold its lower penthouse for $ 22.5 million in a deal involving cryptocurrencies last May, and developers say they will get it for future projects.

Column chart of the number of contracts exchanged, by property price showing the sales of luxury homes in Manhattan at the highest level in years

However, crypto-currency holders are beginning to question the viability of their portfolios – and potentially convert them into hard assets: the price of bitcoin has fallen by about 30% in the past year, when atrium has also fallen.

Kyog may have sold his home at just the right time – and to an attorney for digital assets no less.

Although cryptocurrency buyers may still be very small in number, this is a strange development for the New York area luxury property market, whose fortunes have changed since the plague. Two years ago the sector was at a low. Newly developed apartments, often worth tens of millions of dollars, have eroded the market, and are often not sold for years after they are completed.

But in recent months, as the city has recovered from the blow suffered by the Covid-19 epidemic, demand has exploded – especially for luxury homes in Manhattan and Brooklyn.

In January, 102 new contracts were signed for Manhattan luxury homes – those costing $ 4 million or more – double the number in January 2020. According to a report by broker Douglas Aliman, the amount spent on luxury homes in the city last year was the highest. And almost double the expenditure in 2020.

Over $ 10 million, more homes were sold last year than in 2019 and 2020 combined, according to a Serhant study. “I have never seen such a shortage of quality stock in the prime markets,” says broker Serhant Chase Landow. The supply is so narrow, he says, that its customers compromise on services such as private outdoor space and gatekeepers.

A view of a street in Brooklyn Heights

The upscale neighborhood of Brooklyn Heights: The rich get richer because of savings and higher returns from investments © Michael Brooks / Alamy

Nancy Woo, an economist at the StreetEasy property portal, puts the luxury market revival simply on “People’s people [improving] Financial situations during the plague. ”Many wealthy New Yorkers have become rich in the past two years, due to higher savings and returns from growth stocks, and are destined to profit from a restrained market.

But that’s not the case all over, Wu says. “We are seeing prices at the bottom of the market go down,” because the owners of these homes “have been most severely affected by the epidemic economically.” They do not have digital wallets that can be repeated.

Shibon Duncan’s parents, who emigrated from Granada half a century ago, instilled in her the importance of owning houses, and it has been her dream to own an apartment since she was a girl. She wanted a house in the building with toilets but with soaring prices, “It’s like, what are you doing?” She asks.

Line chart of the median asking price ($) showing the rise in prices in Manhattan over other boroughs in New York

She was able to find exactly what she was looking for in Mill Bassin’s Brooklyn neighborhood. Duncan, who works for the city’s public hospital system, bought a one-bedroom apartment in November that came with a garage and parking for $ 280,000. She now looks around and sees young people who need double-income households to live comfortably – they can not do it themselves. And she also needed help.

Duncan has applied for the New York City Conservation and Development Department’s HomeFirst Advance Payment Assistance Program, which provides up to $ 100,000 for the deposit or closing costs for eligible buyers. “Without this help, I do not think it would have been possible,” she says.

New York City housing has a known likelihood crisis, but the epidemic has placed more barriers to home ownership. “People who lost jobs had to leave the city or confiscate their homes,” Wu says. More supply in this market layer leads to lower prices when there is not so much demand.

A pedestrian crossing is crowded with queens

In areas like Queens, the epidemic has placed additional barriers to home ownership © Shutterstock / rblfmr

Queens was hit particularly hard by this reality – in the 12 months to January, the borough’s median asking price fell 5.7 percent to $ 584,000, the lowest since 2016, according to StreetEasy. Brooklyn asking prices remained constant, while Manhattan prices rose.

New York City’s nonprofit neighborhood housing service that provides low-to-medium-income home lending and education services typically helps 100 to 150 people buy a home each year, says CEO Derrick Griggs. This dropped to less than 25 when customers lost jobs and suffered credit crunch during the epidemic.

Before Covid, banks received debt ratios of about 45 percent when considering mortgages, says Dan Martin, CEO of NYC Housing Partnership, another nonprofit. Since the banks did not want to take on more risks during the epidemic, the banks lowered the usual ratio closer to 40%, and cut off many potential buyers.

Bitcoin and Atrium have lost about 40% of their value in the last 6 months

In Queens, investors are collecting homes in low- to medium-income neighborhoods, pushing communities by offering homeowners that the only way to advance financially is to sell, says Yoslin Genau-Astrala, the district’s director of neighborhood housing services.

Homeowners in the Queens Astoria neighborhood recently reported Energy and electricity bills are skyrocketing To their state assembly member, Zohran K. Mamadani, who “forces the historians to ask if they can afford to stay in their homes and our neighborhood,” he says.

Working-class New Yorkers have been grappling for decades with the market power of gentrification that is pushing them out of their homes. Clinging to them may be more difficult as the economic pressures associated with the epidemic continue.

Steph Chavez in FT Chicago

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Luxe redux: New York’s high-end homebuyers return Source link Luxe redux: New York’s high-end homebuyers return

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