Manhattan Condos Are Barely Yielding More Than Government Treasuries - Bloomberg:
"Manhattan condo buyers who rent out their apartments are getting little more yield than they would with government debt. Newly purchased condos that were listed for lease in the second quarter brought their owners a median return of 2.5 percent, according to an analysis released Monday by property-listings website StreetEasy. It’s been stuck at that level since the end of last year, the lowest in data going back to 2010. The median yield on relatively risk-free 10-year Treasury notes was 2.25 percent in the second quarter. “This is the lowest point we’ve seen in history,” Grant Long, a senior economist at StreetEasy, said in an interview. “It’s a steady downward trend.”
1 comment:
Condos are mismarketed as "investments". They are not investments, they are a terrible financial liability for 99% of purchasers where they can lose their "investment" and more.
For the remaining 1% who are purchasing high dollar condos - they aren't investments, they are a mechanism for money laundering. The purchasers don't intend to ever live in them - they are parking their money there. They can evade taxes or use the condo as security for loans by U.S. financial institutions so that the money isn't subject to restrictions that would imposed in their home countries.
The foreign investors tolerate the skimming, thieving, and other activity by "management" companies because the amounts tend to be less than what the investors would have lost in their own countries. Looking forward to the day the foreign investors decide to stop tolerating losses to management companies that inexplicably believe they are entitled to other people's monies. These management companies are pretty aggressive. They even have their own trade group to perpetuate such nonsense.
Of those top dollar condo purchases (and other high dollar real estate purchases), the U.S. government has already confirmed a very high percentage (30%) of such purchases are entangled with money laundering (at least in the markets examined):
http://www.washingtonexaminer.com/money-laundering-is-shaping-us-cities/article/2618135
https://www.cnbc.com/2017/08/24/a-third-of-luxe-real-estate-deals-involve-suspicious-activity.html
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