As the economy tries to recover from the recession, a sign of the times is the real estate market in New York City, home of some of the wealthiest Americans. Affluent home owners are now opting to sell their homes which have been losing value and are choosing instead to rent as the real estate market tries to recover rather than take losses.
“More affluent Americans are opting to rent as oppose to buy,” says Jack McCabe, an independent real estate analyst and CEO of McCabe Research and Consulting in Deerfield Beach, Fla. “Within the last year, so many people have seen their family and friends get burned in real estate. They don’t see it as being a risk free investment as they used to.”
Patrick Lee, former homeowner in New York City, now rents a luxury apartment for around $11,000 a month after selling his home for what it was worth in 2008. He now lives in a 2 bedroom luxury rental in a new building.
“I wanted to protect ourselves from prices going down,” says Lee, who is a managing director at a major bank. “I didn’t want to be an owner anymore.”
Real estate investors say that more people are willing to take a wait and see approach to home ownership as the economy tries to improve.
A rental company in San Francisco says lots of tech entrepreneurs are choosing to invest their money in their businesses instead of home ownership.
Lee says he feels safer knowing that if he needs to relocate if he loses his job, he won’t have to deal with the burden of selling his home at a loss.
“With so much uncertainty,” says Lee, “It gives me a lot of peace of mind.”
“I suspect a lot of people are underwater and can’t get out,” says Lee. “A lot of people are just stuck.”