The Wall Street Journal reported today that the price of a Manhattan townhouse was marked down 25%, and that the discount may reverberate through the neighborhood:
Brokers were in disbelief when Shelley and Donald Rubin, founder of a giant health-care network and a Himalayan art museum in Chelsea, slashed the asking price of their East 70th Street townhouse by 25% to $14.9 million in May after it had sat on the market for about a year...
That was one of the steepest one-time markdowns for a high-end residential property in recent memory... Some say this deal, in effect, re-prices the market for East Side townhouses because buyers and brokers will now use the Rubins' pricing as a benchmark for similar properties.
How much are they suffering? Well...
The Rubins purchased their townhouse in 1995 for $5.05 million, according to Streeteasy...
They were only able to triple their money in 15 years. So very sad. Excuse me - I have to stop blogging for a few minutes to regain my composure.
Actually, tripling your money over 15 years is really not that impressive, as that really is nothing more than a 8% growth per year over 15 years.
ReplyDeleteSo I don't feel personally bad for the folks in question because they can probably handle the hit. That being said thats a lot of wealth that is no longer there (or never was there). That means that owners of this type of townhouse are going to hold back on investments and spending. When you have millions you have millions to spend and spending millions puts a lot of cash in the pockets of the less than millionaires.
ReplyDeleteWhen these guys fire their housecleaner, don't buy that new car, and stop lavish vacations in Hawaii then there is a NYC housecleaner, an autoworker in ALabama, and the hotel staff of a Hawaii resort who all take the hit.
Success does flow downward on the socioeconomic scale but so does failure.
They only triple their money if it sells at the new price.
ReplyDeleteBoo hoo! The money was squeezed out of the house cleaner and millions of others in the first place and should have been in circulation all along! Wah wah!?
ReplyDeleteTripling your money in 15 years isn't necessarily impressive (the return on investment doesn't take into account inflation), but for the investment, they got to live in a tony section of New York and write off the interest on the mortgage and property taxes (although people in this class probably don't have mortgages).
ReplyDeleteEven if they paid cash, they got to live virtually rent free (outside of property taxes) for 15 years and ended up with 10M. Not too shabby.
Regarding the trickle down economics, just imagine how much that 10M could do if it were invested in green energy or high speed rail - it could help create manufacturing and construction jobs that pay a hell of a lot more than menial service jobs at minimum wage.
@Jack @Doc I get it. You would rather the money be spent otherwise. What you don't get is that this money is NOT in circulation otherwise. This is wealth created which is distributed. Its not as if the maid and the yacht builder would somehow have more money if these people didn't exist. Its a nice fantasy to think that we are all getting a piece of a set pie and if only we could reduce the wealth of the super wealthy that we would all have more. It is sadly not the case.
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