Will Wall Street Bonuses Revive NYC Housing?
While Americans West of the Hudson might decry the return of big investment bank bonuses others-say, local real estate agents or upper and middle class homeowners who are living next to empty, or worse, sublet houses and co-ops-are relieved to see bonuses come back.
The greater New York City housing market has not exactly been strong lately, but the Lehman Brothers collapse in the fall of 2008 basically drove it into a tailspin.
For most of that year and into 2009 top Wall Street employers were straight up going out of business or paralyzed with terror that they might be next.
They cut dividends, slashed payrolls and cut bonuses-the bread and butter for many of the rank and file bankers and secretaries who own homes in the city and outlying suburbs. Enclaves such as Connecticut's tony Greenwich, were devastated.
Even Timothy Geithner couldn't sell his house in Westchester County, joining the ranks of accidental and reluctant landlords.
Now, the "flyover states" are up in arms about Wall Street big shots and their bonuses. But all the big banks have paid their TARP money back, and the senior congressman from Arkan-missi-zona doesn't have much of a leg to stand on.
In fact, the Federal Reserve will be giving $46 billion back to the Treasury Department, the largest payment in Fed history, so you could argue that Uncle Sam is already getting his cut of Wall Street's bonuses.
As Forbes.com has noted: "The effect, if any, is likely to be limited to Manhattan and its wealthier suburbs, the primary beneficiaries of Wall Street income."
But that's Okay. In fact, it's exactly the point. According to HousingPredictor.com, prices in New York could fall another 17 percent in 2010, the worst decline in the country, without something to give them a boost. The first-time buyer credit of $8,000, which has goosed local housing markets in other parts of the country, doesn't do a whole hell of a lot in a market where the median home price approaches to $1 million.
No market -- sorry Detroit and Las Vegas -- needs an influx of capital from its core industry more than New York. Developers, Realtors and homeowners alike look forward to bankers, traders, admins and even mail-room clerks being able to spread the wealth again.