So this is not an article about i told you so!, when it comes to NYC and LA real estate markets that we have written about before in this blog.
But here are some facts about New York city real estate in the beginning of August 2020.
5% of all residents have left the NYC and another 15% are looking to leave, the city is spiraling out of control as we speak, we have even homeless outside of 20 million dollar apartments on the upper east side shooting up heroin on the streets.
So you guys who remember the NYC in the 70s and 80s and early 1990s you know what is coming your way, for you others you are in for a surprise, and not a really nice one.
Police are quitting in droves and here we are, and the rent on Manhattan will drop by a good 30% in the upcoming 24 months time both private and commercial rent.
But make no mistake that the apartments that are trading for 5 million dollars these days will trade for 3 million within 3 years.
So many people are moving away to Texas and Florida and this will affect the NYC real estate prices for a long time to come, both for renters and sellers.
It is not fun to sit with an apartment that you bought for 5 million dollars last year and there is no offers or only 3 million dollar low ball offers coming your way.
So a lot of sellers will get into deep trouble in the next few years in New York.
So as you know NYC is really expensive to live in these days and if you move to Florida or Texas you get a big house for 500.000 dollars ,but in NYC you get a shoe box in the Bronx or Brooklyn for that price.
Of course the COVID-19 pandemic has also accelerated the leaving from the NYC and the same goes for LA.
Democratic run states with high taxes and being weak on property and personal crime is not a good mix for real estate prices one bit.
So what about the LA real estate market? , so we know that houses that traded for 15 million dollars in the last few years are trading closer to 10 million dollars these days.
And very well off people are actually eating the losses on houses they paid 15 million dollars for a few years back and they take 9-11 million dollars for the same property these days.
So now we have covered the super expensive real estate ,but what about the normal to mid level 1.2-3.5 million dollar homes, what will happen to those prices.
So the cheaper homes will trade at close to the same level they have before the COVID-19 pandemic, and the reason for this is quite simple people and families need to live some where.
But homes close to down town and certain areas like Venice for instance will drop in price due to the unsafe environment, even more so than it was pre covid -19.
So families will look at properties as far away from Skid row and down town and Venice where the home less population is growing by the numbers each week.
Now we need to help the homeless and fixing the mental health and drug issues, this is a bigger topic but all of this will drag down the real estate prices.
Now you need to remember that New York has 4 times more cops than LA has, okay LA has also the Sheriffs , but there is still much fewer cops in the LA area than you have in the NYC area.
So some might say that this is now a good time to buy a home in the next 24 months time when the home prices are dropping from ATH levels, and yes if you are gonna stay in LA or the NYC this can be a good time to buy that home you could never afford before.
But keep this in mind we are living in a brand new world and there are no signs that LA and NYC will ever become as hot markets for real estate as they have been in the past 20 years time, so be careful when you buy, because you might be sitting with that property for a very long time to come.
Final thoughts: so when better off and wealthy people do not feel safe in a city they leve, and with that a large tax base with them and this is the big risk for both the NYC and the LA metro area that if taxpayers leave towards better run states there will be even less money to fix problems in these cities, and of course this all will affect the real estate prices both on the buying and renting side of things, it will be a renters and a buyers market for the next 36 months to come in these very large cities one on the east coast and one on the west coast.