In New York, $2 million apartments with 20-year mortgage?

By Rachel Margolis (CNN) — A century ago, U.S. home prices looked like this: three bed rowhouses going for $5,000; spacious, unpretentious apartments for $125.

Today, in the U.S., they look like this: four-bedrooms on the top of century-old commercial buildings going for up to $2 million, plus $5,000 a month.

Think about that, and then ask yourself how that’s sustainable.

When the billionaire Trump family began to buy up unfinished high-rise apartment buildings across New York City in the 1980s, they did so because of the tax breaks offered in the notorious “incentive plan.”

By moving into an active structure, a new owner could qualify for mortgage deductions on those apartments over and above the next 20 years. That’s extremely valuable in a time when tax deductions are in jeopardy.

But recently, many new buyers in New York were locked into financial contracts for 20 years, even though the rental market there is reportedly plateauing.

They could have rented out the apartments quickly for much less than the cost of the long-term mortgage, but they hesitated, as that would have greatly decreased their apartment’s value.

Real estate and luxury housing experts say that the homeownership has become an unaffordable luxury, and may continue to fall long-term in real estate prices.

But while U.S. President Donald Trump himself is in competition with other developers to build luxury, high-end apartments in the form of the Trump International Hotel and Tower in the heart of Manhattan, Trump himself says that he did not buy any units in it.

He also says that he and his family, and his company, do not profit from the project.

However, reports, including documents recently unsealed in court, are saying otherwise.

Of the 729 units in the Trump Hotel and Tower, according to CNN affiliate WABC, Trump himself is listed as the owner and manager of 338.

In the Trump Organization’s financial reports, Trump says he is “not a party to the financing transactions” for the hotel and plans to transfer ownership to the Trump Organization.

In the meantime, he continues to charge rental fees for the branded apartments.

To prevent construction cost overruns, some companies involved in the Trump Towers construction are being sued in New York State Supreme Court, accusing builder Thor Equities of fraud and false advertising.

After the bankruptcy of Trump Hotel’s parent company and its subsequent restructuring with the Trump Organization, several of the Trump portion of the project failed to be completed, according to a lawsuit filed by retired judge Arlo Anderson.

The litigation against Thor says the Trump Organization deceived buyers of the buildings by billing them for unfinished apartments.

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