NYC real estate ‘pain’ will linger until the political shift changes: Don Peebles
'It's a vicious cycle'
New York City's real estate "pain" will linger until the political shift changes, said Peebles Corporation CEO Don Peebles, giving his outlook for the city's housing market.
Peebles told FOX Business’ Maria Bartiromo on “Mornings with Maria” that in the early ’90s New York City was a “very unlivable city and then the city went so far as ultra-liberal as it is to elect Rudy Giuliani and then Michael Bloomberg.”
Peebles explained that for about two decades the city was governed by a "progressive Republican mayor" and he believes that "it is going to have to get worse before the political shift changes."
"Right now New York City politics has gone heavily to the left and these Democrat socialists are getting elected in state and city government," he said. "So I think there is going to be more of that in this next election cycle, so, I think there is going to be pain first.”
Real estate activity in the Northeast is picking up, but residents still appeared hesitant to move into Manhattan last month.
Residential sales contracts in the Big Apple fell 31% when compared with the same period last year, according to a report by Miller Samuel Real Estate Appraisers & Consultants for Douglas Elliman, with the largest decline seen among the most expensive listings.
There was a 75% decline, for example, in signed contracts in the $4 million to $4.99 million range.
On the other hand, activity in the suburbs was booming.
Deals valued at more than $4 million increased six-fold in Greenwich, Conn.
On Long Island, deals valued at more than $400,000 comprised the largest share of annual gains in single-family contracts signed, data showed, and that excludes the expensive Hamptons area.
People wait to visit a house for sale in Floral Park, Nassau County, New York, the United States, on Sept. 6, 2020. (Xinhua/Wang Ying via Getty Images)
New data from United Van Lines also indicated a strong interest in leaving New York City where moves are comparable with the same period last year at a time when fewer people throughout the U.S. are moving.
So far in 2020, 67% of moves throughout the state altogether are outbound, which is a 4 percentage point increase over 2019.
Even moving companies have described an “insane” uptick in moves out of Manhattan.
GET FOX BUSINESS ON THE GO BY CLICKING HERE
Peebles said that resident "vacancy is at a record level that will continue to increase as leases roll over."
“75% of New Yorkers who live in apartments live in rental apartments and those are one-year leases,” he said. “Those are rolling over and as they are rolling over, people are moving outside of the city as far as the Hudson Valley, for example,” Peebles said.
Peebles went on to say that he expects to see "significant distress" as vacancies come to pass.
“It's a vicious cycle. The budget deficit is going to continue to increase in New York City and New York State,” Peebles said and he added that the city would be forced to make significant budget cuts that would reduce services.
“The city is already very dirty. I think anyone who lives in New York City sees how dirty it is. The moment you drive in from any other jurisdiction that surrounds New York City, you know you’re getting in New York City when you see all the trash on the sides of the roads. Crime is up and those things will continue to push people out when their leases roll over and they’ll say, well, I can do better, live better outside of the city,” Peebles said.
CLICK HERE TO READ MORE ON FOX BUSINESS
Fox News' Brittany De Lea contributed to this report.