Bonuses Trumping Interest Rates in NY Market
The NY Post concludes a brief article about interest rates’ upward trend and the possible impact on an already-softening market with this almost-throw-away comment: Regardless of what happens, Manhattan real estate might be less dependent on interest rates than the rest of the country, thanks to year-end Wall Street bonuses. So don’t count on the…
The NY Post concludes a brief article about interest rates’ upward trend and the possible impact on an already-softening market with this almost-throw-away comment:
Regardless of what happens, Manhattan real estate might be less dependent on interest rates than the rest of the country, thanks to year-end Wall Street bonuses. So don’t count on the boom ending just yet.
At this point in Brooklyn’s evolution, we’d argue that the brownstone market is also quite tethered to Wall Street’s fortunes, although most of the bankers we know are pretty much limited to Brooklyn Heights and Cobble Hill. The trickle-down effect alone should make everyone in the Brooklyn market keep a close eye on what happens on Wall Street over the next month. If Goldman Sachs is any kind of an indicator, a few measly fed fund increases won’t get between the newly-moneyed and their castles.
Taking an Interest [NY Post]
Having been a banker for 5 years, it is important to understand what many have already noted, most folks do not make bonuses of greater than 250K. For every banking group (industry / product)within a firm, there are generally 20 Analysts (1-3 years out of college) who earn bonuses of between 30-70K (pre-tax) and 10 Associates (1-3 years out of business school)who earn bonuses between 60-250K (again, pre-tax). As the tax-rate is close to 50% on the cash bonus, you can do the math. If you add the fact that most post-MBAs have MBA debt, there is not all that much money going around at the end of the day to purchase a significant amount of real estate. Since a significant amount of VPs-MDs bonus is stock compensation, the amount of cash floating around is not the million an MD might earn. Additionally, it is important to remember that the ranks thin out significantly on the way to MD. So, I would not expect such a rush to purchase real estate.
JoshK you work on a trading desk? Not according to your city council website (if that is you)
City Council candidate Joshua Yablon is a Vice President at Greater Talent Network, the nation’s premier celebrity speakers bureau.
JoshK you work on a trading desk? Not according to your city council website (if that is you)
City Council candidate Joshua Yablon is a Vice President at Greater Talent Network, the nation’s premier celebrity speakers bureau.
Lots of traders, analysts, investment bankers, and fund managers live in Park Slope, Fort Greene, Clinton Hill, Prospect Heights, Boerum Hill and of course Brooklyn Heights and Cobble Hill. And lately I’ve been hearing of bankers moving in to Lefferts Manor, Windsor Terrace, Ditmas Park, and other areas too. Just because they work on Wall Street doesn’t mean they are blind to the great housing stock throughout brownstone Brooklyn? Why not buy a mansion in Clinton Hill for the same money of a regular sized house in Bklyn Heights or a med. sized condo in Tribeca? But housing stock’s not the only reason to come here, the schools are good (well, at least a lot of them are), there’s less noise, great restaurants, fresh direct delivers, and much more.
I don’t know anybody who claimed that 10 years back (1995) was the top of the market. So its total nonsense to suggest that people have been “misjudging the RE market for 10 years”
Bonuses help the RE market of course, and interest rates hurt it a little. Its ultimately a matter of psychology though. If people feel that prices are going to keep going up no matter how high the price, they will buy. Otherwise they won’t buy.
Heres an interesting statistic — one NJ paper had an article on the number of people who made more than $1 million a year (according to Nj tax records). For the last 3-4 years, its been < 9000. I would guesss that a large chunk of those would work outside of Wall Street, some even as far south as Philadelphia. I wonder how much the impact of the WSJ megabucks (> $1M) is even in NJ.
nevermind
Oops – got the curbed link wrong
http://www.curbed.com/archives/2005/12/01/curbed_roundtable_december_stateothe_marketreport.php
Not questioning your underthecounter coverage. Hey, I’m a “mid-level” guy myself, but I enjoy reading about the big boys (especially if there is some mockery involved).
I guess my only point was that Wall St. has a very tangible impact on the local r.e. market. I can’t think of another industry that generates the shear number of +$250K earners, other than Wall St.
Anon 4:22,
No disagreement with you there in general (heck, we work on Wall Street), but the minority who get the majority of the attention are eminently mockable, from the one-dimensional frat boys (okay, make that two dimensions: money and sports) to the idiots dropping $10K in a single night at a strip club or one-upping each other for beachfront in the Hamptons. Good material though.