New York City has been almost entirely immune to the subprime crisis because of its famous housing co-ops. While the national housing market has suffered the consequences of banks willing to recklessly hand out mortgages even to those with low credit and no collateral, the New York City housing co-ops, which own about 85% of the apartments for sale in the city, have much stricter standards in regards to who they allow to purchase their apartments. These tighter rules have successfully protected the city from the real estate turmoil that has engulfed most of the national market.
Indeed, even the apartment buildings in New York City that are not cooperatively owned have benefited from the co-ops’ effective containment of the subprime turmoil. More and more buildings being built these days are condominiums, which offer much more flexible ownership rules – such as no prohibition against subletting – and lower fees. Though we can thank the co-ops for saving much of the city’s real estate market, it is the condominiums that usually make the most sense for mobile buyers or investors.
The co-ops and condominiums are just half the story, though. With the U.S. dollar’s recent plunge against all major currencies to make this current quarter the ideal time for Europeans to buy a home in the city. Housing prices in New York City may be at record highs and only climbing for Americans, but for those earning a living in pounds or euros, very safe yet high yielding investment opportunities abound throughout the city in the form of apartments for sale.
Indeed, major European investors are taking note of this almost unique confluence of events and purchasing large amounts of New York City real estate.
Prices in the city are not expected to get much lower for holders of euros or British pounds, either. With the dollar falling about nine cents against the pound and twelve cents against the euro this year alone, most analysts believe that European and British central banks will soon be forced to lower their interest rates. When this happens, speculation will end about a round of cuts in interest rates by the Federal Reserve that is unmatched by foreign central banks. A massive cloud over the dollar will be lifted, which will lead to a significant boost for the dollar in the foreign exchange markets.
While it is possible that the dollar will continue to decline in value even after actions by several major foreign central banks give it a boost, analysts doubt its decline will be faster than the rise in property values in New York City. This is especially true in Manhattan, where a record price boom is showing no signs of abating in the near or distant future.
Just as 5th Avenue now sees large numbers of Britains and Europeans shopping in near fascination of the deals available to them, more and more New York City apartments and homes are being purchased by savvy European buyers.