Real-estate Out of Reach of the Super Wealthy
The housing boom is searching for ways to keep going. Prices for many high-end pieces of real estate are now out of reach for even the 1% of the super-wealthy.
During the last housing boom, terms were reset for the “little people” to make home ownership an attractive financial option. Mortgage maturities extended, down payments dropped, and of course every knows by now about the role that all-time low interest rates played in attracting people to debt-fueled spending.
Now we see similar changes taking place in the top-end of the real-estate market .
Consider this apartment recently listed in New York City. With rent set at $500,000 per month (!), it beats the previous record holder located at the Palace Hotel at 455 Madison Ave., which only rents for half that much.
Why pay $6 million a year to rent an apartment? (Or better still, who would do such a thing?)
Partly the answer lies in considering what it would take to purchase it. With rents this high, the selling price of this palatial pad would be around the $100 million mark. For even the super-rich, this is a bit of a stretch.
In many ways this current housing boom is constrained to the upper echelons of wealth. Now it seems as though even they might be finding prices a little tough to swallow.
(Cross posted at Mises Canada.)