Term Paper: Diminishing Middle Class

Pages: 17 (4873 words)  ·  Style: MLA  ·  Bibliography Sources: 13  ·  Level: Master's  ·  Topic: Urban Studies  ·  Buy This Paper

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[. . .] Market upswings

The highest new development sale took place in the Greenwich Village during the past month. The property is located at 130 West 12th Street which made a sale of about $13M. There was another sale that took place on the 130 West 12th Street in the last quarter; this was a penthouse that was sold for $8,095,087. Another large development sale took place at the Upper West Side. A sale of $8,858,775 was made on a building that is situated at 535 West End Avenue. An interesting thing to note here is that all of these sales took place September. From among the 379 units that were sold about half of those units were sold for over a million dollars (MNDR, 2012).

The Sheffield located in Midtown West at the 322 West 57th Street made 20 new development sales that ranged from $700K to $3 Million. A large sale of $6.1 million was made at Trump Parc located at 160 Central park south. An increase of 8.5% was noted in the price per square foot by the Midtown West in this quarter for the new development sales. The per square foot median price increased up to $1,436 which is $113 more than the previous quarters (MNDR, 2012).

Market downswings

As mentioned by us in the last quarter that the Manhattan median price per foot has been on a decline for the last three quarters in a row, this declining trend has continued in this past quarter as well. The main reason behind this trend is more and more people renting and a lack of inventory.

As compared to the second quarter the price per foot is down to 9%. A decline of $103 was seen from $1,165 in second quarter and this further declined to $1,062 in the third quarter (MNDR, 2012).

A decline in per square foot price was reported by Murray Hill on a quarterly comparison. The decline was of about 7% that made the price come down to $98. It was in the second quarter that a bigger decline was reported in the sales of about 42% that made the prices come down to $783,200. The lack of inventory can be considered a reason for this decline in the numbers as there were only 5 new development sales by Murray Hill in the past quarter. East 29th Street was where all of these sales took place (MNDR, 2012).

Inventory Analysis

When an analysis of the data was done, it showed that the Upper East Side and the Upper West Side were where 18% of the sales came through. 10% of the contribution in sales was made by the Midtown West and the Midtown East. When the 17% of sales that took place in Harlem are added it makes the total sales for the quarter to be about 45%. There were 11 new sales that took place in Harlem as compared to the last quarter which made the sales come up to 66 for Harlem only (MNDR, 2012).

The rest of the 55% of sales were divided up in the ten other neighborhoods. In areas such as East Village, Gramercy Park and Murray Hill the reasons for the declining sales as well as the price per square foot is the lack of inventory.

Upper East Side

It can be seen from the data given above that the price per square foot for the studios located in the Upper East Side was $1,002, for bedrooms it was $821, for two bedrooms it was $1,355 whereas the price for the 1500+ square foot property was approximately $1,405.

When we talk about the percentage that was contributed by these properties in the overall sales in the Upper East Side, we see that studios account for 10.3% of sales, 1 bedroom apartments make up for 10.3% of the sales, 2 bedrooms for 51.3% of sales whereas, 1500+ square foot areas make up for 28.2% of the total sales.

Upper West Side

When we look at the prices at the Upper West Side, we notice that the price oer square foot for studios total up to around $1,031, for 1 bedrooms $1,012, for 2 bedrooms $1,371 whereas for the properties with more than 1500 square feet of place the price was $1,487.

Looking at the percentage of contributions made by the sales in the Upper West Side we see that the studios contributed for 22.6% of the sales, 1 bedrooms for 6.5%, 2 bedrooms for 21.2% and 1500+ square feet of place for 48.4% of the total sales.

Overview of Foreign Investment

Chinese Interest

A lot of buyers from China are buying the luxury properties across the U.S. This trend has been putting in billions of dollars in the real estate market of United States (Schuker, 2012).

In order to attract more and more of these Chinese buyers the real estate companies have started to install wok kitchens in their latest developments. Along with this these real estate agents have started to put up luck numbers on the choice units in accordance with the feng shui principles. The companies are sending their representatives to China in order to attract more and more customers. Other than this some of the real estate companies have started to package government programs along with their property sales to increase and attract more foreign investment (Schuker, 2012).

Most of the major buyers in the major U.S. cities such as New York, Los Angeles, and Miami are from China, Korea or Hong Kong. The number of these buyers has increased so much over the last few years that the landscape has started to change radically.

A Versailles-style mansion located at Sunset Boulevard in Beverly Hills, Calif was purchased by a Chinese couple last month for $34.5 million. A year before that $28 million was paid by a businessman for the purchase of a property nearby. One57 is a new Manhattan high-rise with many full-floor apartments each of approximately $50 million, in the past six months many of these apartments have been bought by Chinese buyer. This was reported by two separate people who are closely affiliated with the situation (Schuker, 2012).

In around to attract the Asian and particularly the Chinese buyers the luxurious full floor apartments have been very cleverly built by the on 80th to 88th floor. In this way the builders have very cleverly targeted the Chinese believe of 8 being the lucky number. Apartment on 88th which has the worth of about $50 million is currently under contractor of a Chinese buyer (Schuker, 2012).

From among the apartments located at the New York's 515 E. 72nd St. 15 apartments worth $1 million have been bought by Asians in the past six months. The new Ritz-Carlton Residences in downtown LA has half of the recent buyers from Asia; this project is developed by AEG. It has also been noticed that some of the buyers are buying in bulk as well, last year a businessmen from Shanghai, Fang Yi Liu, bought 17 apartments in the Artech which is a modern glass building that resembles a cruise ship and overlooks the Intracoastal Waterway near Miami, and the 17 apartments were bought for $14 million (Schuker, 2012).

European Interest

With the worsening situation of the euro debt, the affluent citizen from Britain, France and other European countries are flying to buy the real estate that at the moment is present the most stable conditions which is the Manhattan real estate (Li, 2012).

It is expected that the prices of the New York condos will be increases due to the limited number of them present on the island, due to this the international buyers can gain profits by selling their properties and saving themselves from the taxes that they have to pay while living in their home countries (Li, 2012).

Francois Hollande is a candidate of a French socialist party who at the moment has caused a great deal of worry for those living in Paris. According to Holland those who earn more than 1 million euros ($1.24 million) per year should pay tax rate of 75% including the capital gains. There are chances of additional breakdowns in the euro zone talk due to the difference in opinions of Hollande and the German chancellor Angela Merkel and all this could lead to even more delays in finding solutions to the problems (Li, 2012).

Last week in an interview with the CNBC, the vice chairman of Prudential Douglas Elliman and a top New York residential broker, Dolly Lenz said that the Europeans are coming to New York in droves due to the fact that they are worried about what is currently happening in France and what might happen after the elections. Therefore, he explained that the investments currently being done by the Europeans in the New York real estate is actually fright capital (Li, 2012).

According to Lenz the record low interest rates in the U.S. are… [END OF PREVIEW]

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