I was walking through Manhattan yesterday on a hot summer day. It seemed everywhere you looked there was new apartment construction. All the signs told of exquisite bathrooms, extra large windows and other luxury features. I thought maybe this is the time I can finally move into the city from the suburbs. There was one major problem with my dream, I could not afford even the smallest units available.
For some background, I work in the financial services industry (actually I was recently laid off but that story is for another day) with an annual salary plus bonus of slightly over $100,000.00. I am single and have great savings. I am one of the lucky middle class Americans who can actually still save money (well that was until the unemployment notice came but again, another day another story). I have a Co-operative apartment in a suburb of New York City that is fully paid for and worth about $160,000.00. I know I am better off than probably 90% of all Americans and yet I still can not afford even a simple one bedroom apartment in any of these new buildings.
After seeing models for three different buildings in the Chelsea section as well as two on the Upper West Side I realized that at least for new construction that I could not find any apartment for less than $1 million dollars. For those in the Mid West that just hit the floor, I know believe me I know. If I can’t afford that and neither can almost anyone I know, who exactly is buying these apartments? Most of these buildings are actually close to being sold out. The answer is obviously rich people but not necessarily all from the United States. You see the shrinking dollar has allowed people from the upper classes of Europe to come and purchase these apartments at what are bargain prices relative to their currencies. It is that fact that has kept the prices at levels unaffordable to even very well paid Americans.
To add insult to injury many of these buildings offer a ten year tax abatement so in fact the middle class people of the city are subsidizing rich Americans and foreigners. I wrote this post about that issue about one month ago. A tax abatement is normally used to entice people to areas needing gentrification. Anyone who has been to New York City knows that Chelsea and the Upper West Side do not qualify.
A declining dollar should be good for exports but although our trade imbalance has improved it is more from diminished imports than improved exports. Our manufacturing base is nearly gone so a declining dollar does little to improve the trade imbalance without a real plan to revive the manufacturing base. Wouldn’t it be a better use of taxpayer money to provide tax incentives to bring back manufacturing jobs? Instead we are providing tax breaks to the wealthiest among us at the expense of education funding. It is time that we stand up and say enough is enough.