Rosenblatt says New York real estate is back in the hands of locals -- the ones who can afford it, that is. Here's what else he had to say:
HousingWatch: For so long it felt like Manhattan real estate was mostly being bought up by the international market -- Europeans in particular. Has that changed?
Rosenblatt: I've always maintained that there are plenty of people out there in this country with money and that they are spending it on real estate. Listen, although we went through an insane adjustment -- with the high-end hit a lot harder than the lower end -- I see data that shows the high-end has recovered well here. I see the market as a whole has improved a lot.
But if you look, there is a direct correlation between when Lehman Brothers fell and [when] the high-end market fell.
If it's not going to be the foreign market, then who's buying?
I have no foreign buyers. I know they are out there. They are out there because confidence in everything in the country has improved over the last 12 months. When confidence improves buyers step up to the plate. But the purchasing power of foreigners has gone down in the last five months. The U.S. dollar has appreciated outside those major countries.
Why does that stop them from buying?
When a European buys U.S. real estate you are converting their currency to the dollar. They are subject to currency trends and the trend has looked up for the dollar. The reason foreigners were flocking to the U.S. for real estate was because they were taking advantage of currency trends in their favor. Four years ago their purchasing power was increasing, which made dollar-based assets more attractive. So they were buying as much as they could with their dollars.
Now that the opposite is true (the dollar rising against major currencies), foreign purchasing power has declined.
A year ago a million euros could buy $1.49 million in U.S. assets on the currency conversion. Now it's just $1.35 million --$140,000 in purchasing power was lost in just one year.
Everything worked out in their favor before. The demand was there and it was tied to local confidence in assets class, availability of credit and local currency trends. Now concerns for the Greek and Portuguese markets are spreading and people are getting out of euros and into dollars again.
The market conditions can be rather confusing when you hear brokers talk about how the last two years were two of the best years for them.
The overall market really was down. We all saw it. When you talk to individual brokers who individually had a good year, then you're just getting their viewpoint. What they experienced was not the market trend.
Sales volume from mid-2008 to mid-2009 went tumbling down -- fell off a cliff. Many people don't realize that the numbers you read are for homes that were sold three to six months earlier and not when the numbers come out.
There is a lag specifically with Manhattan real estate. Contracts don't sign right away.
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