Struggling NYC real estate market could create another financial crisis: Don Peebles
Peebles Corporation CEO explains the 3 things that created a ‘perfect storm’ for NYC’s decline
Peebles Corporation CEO Don Peebles told “Mornings with Maria” on Monday that the struggling New York City real estate market amid the coronavirus pandemic and civil unrest could create another financial crisis.
Peebles also explained the three things that “converged on New York City” to create a “perfect storm” for the city’s decline.
“One was a diminished quality of life and an increased cost of living and doing business,” Peebles said, adding that rising crime contributes to the diminishing quality of life in the city.
He also cited the pandemic and the corresponding “massive shutdowns,” which essentially led “to the quarantine of the entire city and most of the state,” as contributors.
“And then add that to the election and also the civil unrest that took place over the summer,” he continued, referencing the violence and looting that took place in New York City following the death of George Floyd, a Black man in Minneapolis police custody.
“Those things have forced people or encouraged people to leave New York City and they’ve been doing that in droves at the tune of about 300 people a day,” Peebles told host Maria Bartiromo.
Bartiromo noted that millions of tenants are behind on rent and pointed to the Federal Reserve Bank of Philadelphia, which surveyed unemployed workers and found that outstanding rent debt could reach 7.2 billion dollars by the end of this year.
Peebles said that demand for owning properties in New York City in particular, has “declined rapidly.”
He went on to say that among renters, which he said makes up about 70% of all New Yorkers, there are “increased levels of delinquencies” as well as lower demand.
Peebles explained that as a result, rents are dropping, delinquencies are increasing and landlords are not able to pay their mortgages or property taxes.
“So that’s going to put further strain on New York City and of course create another real estate financial crisis if we don’t come up with a plan to deal with this,” he continued.
The median rent for a one-bedroom apartment in Manhattan declined 15.4% year over year in September, according to data from Realtor.com.
Overall, in the 100 largest U.S. cities average one-bedroom rents fell 1% year over year.
There has also been a well-documented flight from New York City throughout the pandemic, as Manhattanites seek refuge in nearby suburbs or in different states.
Bartiromo asked Peebles where New York City residents have been moving to.
“Florida has always been, especially for the last two decades, a draw to New Yorkers, but normally, it’s a split of time, New York and Florida,” Peebles responded. “What you see now is more and more New Yorkers going to South Florida and throughout the state, even the western coast of Florida as well and that we haven’t seen before.”
He noted that “it’s not just high-income earners and wealthy New Yorkers who are going to Florida, it’s the middle-class workers who are pursuing jobs and quality of life.”
Peebles said people are also moving to other states in the Sun Belt, including Texas and Tennessee.
“You are going to see much more of a shift out of California unfortunately to Nevada because it’s a tax-friendly state, no state income tax and very business-friendly,” he added.
“And so people are looking for quality of life, fair taxation and they’re looking for an environment that is supportive of business so that they can advance their careers or of course entrepreneurs can advance businesses and they are not seeing that as effective in New York City, for example.”
FOX Business’ Brittany De Lea contributed to this report.