How the Financial Crisis May Not Be So Bad for New York

I think this article frankly overstates the importance of it's point a LOT.

Firstly, all these creative people already live in NYC if they are creative enough to get a good job. It's not like there are tons of artists out there in Des Moines just waiting for rent to drop 20% to move to nyc.

Secondly, yes, the oil price issue will force people to live more urbanly, however, nyc does not corner the market on that. It's true it has the biggest and 'best' public transport in the nation yes (if you don't mind waiting in dank disgusting hot stations to get on disgusting packed trains), but many other cities have been getting increasingly urban and working on public transportation for years now and will probably accelerate this with the coming stimulus package, transport that will be new, clean, nicer.

New York may always be the place for the 'elite', but this is not many people and there is no reason to think the % will grow. Most people still care more about living in nice weather and affordably, able to have a car, etc.

Many cities such as Orlando, Atlanta are becoming a LOT more urban than they were 10 years ago with many new developments and walkable live/work neighborhoods, at 1/3 (or less?) the price of NYC. Those are the places I expect to benefit from this trend, not NYC.

Sorry. Yes if NYC prices drop 50% to Orlando/Atlanta levels okay, maybe so, but that isn't exactly 'good' for you guys..

For example, in Orlando, yes your salary is less, maybe 50%, but for that you can get a beautiful huge 2 BR condo in the best building in the city, in the center of the best and most beautiful urban district of town, one of the most in the country frankly, overlooking a park and lake for $400,000, and pay no income taxes! And most people prefer the weather to NYC, though I do not.

And prices are dropping there too. This country is just too big, you can't expect everyone to just move to NYC, no matter how much they want to.

Flying home to take care of your parents is still going to get more and more expensive as they get older and sicker, for example. Haven't seen any solar plane proposals yet.

Also, oil prices are still hitting new lows and are not likely to be a real shock again for many more years.

Posted by: l12 at February 19, 2009 11:15 AM

11217:
Yes downtown Atlanta is oddly still a ghost-town but midtown and some other neighborhoods are pretty happening. But yes, Atlanta has a problem in that it has been urbanizing in a number of different spread apart neighborhoods and hasn't reached the critical mass to connect all of them yet. Though the beltway light rail project they have been working on could be amazing if they ever get it done, could be an awesome urban city in some years.

Orlando is a much better example where everything is completely suburban and spreadout except for downtown/thornton park, which is getting to be fairly large walkable area and is beautiful, so the urbanization is concentrated.

Don't know anything about Charlotte but saw on PBS they are making a big effort to urbanize with a beautiful light rail system, looks pretty nice.

doldrums: really don't know what you are talking about, downtown Orlando is extremely lively at all times of day and night and growing, and the condos are mostly sold, not all turned to rentals like in nyc. Just that there is 1 huge unfinished eyesore building that is in permanent limbo because of Lou Pearlman's arrest I think.

traditionalmod: as I said, almost everyone very interested in creative arts is already living in NYC.. or LA and always has been. This is a tiny % of people, not necessarily rich people, not a growing % of people, not enough to hold up real estate values in NYC. Additionally I do think that more and more creative people are staying in their home regions as they are becoming better, more urban, more cultured (thanks to the Internet in large part). Yes Atlanta and Orlando property values are in terrible shape but they have already corrected a large amount and are pretty flat now, and hence will recover before NYC, as everyone pretty much knows. Plus, outside of NYC there is a strong culture of homeownership, and people can actually afford a downpayment fairly easily, whereas NYC people are happy to stay renting while values drop and drop. The mortgage recovery plan is not going to be focused on jumbo loans and it is much harder to get a loan over 500k.

Posted by: l12 at February 19, 2009 2:10 PM

I certainly think a huge drop in prices will be great for New York in the long-term and attract more creative people. But that doesn't mean prices aren't going to drop big first and that it might take 10 years to get back to the peak we have seen. Whereas, in quickly growing places where baby-boomers want to move to like Orlando, Atlanta, prices will recover faster.

For prices to recover you need BUYER DEMAND. How many of these creative professionals are buyers at all? They mostly rent. And those that want to buy are smart enough to know that prices will keep falling for years so why to buy?

Anyone predicting a bottom in anything this year is nuts. People need to recover their stock portfolios before they feel up to buying anything as well. These things take time..

Posted by: l12 at February 19, 2009 2:18 PM

parkedslope: very good comments, but I think the differences can easily make New York fare WORSE than the rest of the country, not better. After all, in the 1970s it did. An economic depression means higher crime, cutbacks in public transport and other niceties that make urban life livable.
This is exactly what drives people out of the cities and into suburbs behind a gate.

We'll see how long all the gentrifiers and investors want to stay and raise their kids in New York as crime spikes. Also, New York was subject to the same massive overdevelopment as everywhere else but possibly worse, due to the phenomenon of 'hot neighborhoods' where everyone decided that you could never build enough fancy new condos within 4 subways of McCarren Park because there would always be investors to put up with renting to partying hipsters for a few years as their investment in 'the next soho' grew.

The problem with this article is it's simply not the creative class that creates wealth in a city except in the very long-term. It's all the investors who are seeking to capitalize on that long-term. They will still be out there, it's true.. If they aren't too burned from the past. After all.. after the internet bubble, people didn't stop investing in internet companies, but they sure didn't do it as much and they lost 90% of their value.. once burned twice shy. Especially when you could be investing in Beijing apartments..

Posted by: l12 at February 19, 2009 4:01 PM