Many people pinpoint 2008 as the day NYC's real estate woes began. I put the date earlier. I knew something was up in February 2008, when rental apartments - some in very nice parts of the city - were sitting on the market for three or four days - even a week sometimes! But many people don't remember what I call the great hiccup of 2005. This was the beginning of the subprime mortgage foreclosures, when adjustable mortgage payments rose out of the borrower's reach. 2004-5 was actually when the majority of the United States started to go to hell, quite frankly.
In New York? It was a hiccup. Some loans didn't come through. Co-ops started tightening their reserve requirements. Properties that had taken 2 weeks to go into contract were taking 2-3 months instead. It was, as my colleagues said then, a "return to normal".
The market resumed going upwards after a few months in late 2005-2006, but at a slightly more languid pace. Up it did go, however, until the great crazy crash of 2008.
Even then, NYC hasn't done so badly. Prices went down 10%-20%. But what I saw more was the removal of properties from the market, with fewer sales actually taking place. In my own 80-something unit building, over a year went by without any closings.
Then something started to happen - cash buyers started buying again. This was important because they established comps that mortgage companies could use for lending purposes.
Thus New York City avoided what could have been the fate of many overheated metropolises throughout the country. How? Partially thanks to cash buyers - and the foreign buyers who chose to park their capital right here in Gotham. Sure, there are other cities with a lot of foreign home ownership, and you'll notice they aren't doing so badly either (Seattle, for instance).
In short, this article shouldn't be a surprise. It shouldn't be a surprise that people are buying what still looks like cheap real estate. And it shouldn't be a surprise that condos - shiny new with less strict financing and board requirements - are favored. Our foreign neighbors have helped New York stay one of the top cities in the country.
Foreigners purchase one-third of city condos | Crain's New York Business: