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When New York Real Estate Lost 50%

When New York Real Estate Lost 50%

In recent memory, the global financial crisis of 2008-2009 is what most of us might think of as the last time when real estate investors lost significant amounts of money. Other than extreme cases like those, we often think of investing in physical property as being “safe as houses”. Today’s suggested reading is this UC Davis study on how $10,000 invested in New York Real Estate in 1920 would have declined by half to just over $5,000 by 1939.

Manhattan apartments apparently represented 5-10% of all US real estate wealth at the time.

My lists of REITs have been among the most viewed pages on this website, and I plan to post updated ones as I continue to see interest. Meanwhile, you can review my earlier lists of top 500 global REITs by sector, how equity REITs performed vs mortgage REITs, and performance of stocks vs real estate in this Yale study and this Harvard study.

As well as New York real estate has performed from the depth of its dark days (when it was far less safe to walk the streets), my investment view on Manhattan apartments (or those in any other major city, for that matter) is that they are best when you live there, and just as importantly know the risks. Just because property prices haven’t fallen 50% lately doesn’t mean they can’t do so again soon.

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