For perhaps as long as the past 20 years, Bernard Madoff has run what is claimed to be the largest Ponzi scheme in history. Having once consistently delivered investors with double-digit returns, Madoff has now admitted guilt in an investment scheme that lost his clients - including Steven Spielberg, the owner of the NY Mets and the Elie Wiesel Foundation for Humanity - tens of billions of dollars.
Although some Madoff investors say the loss isn’t impacting their existing real estate plans, it’s not the case for all. As many as four condos in one Palm Beach, FL building were put up for sale the weekend after the scandal broke, causing fears about the high-end Palm Beach market. (I’ve already set up my Trulia email alert for new properties listed in Palm Beach over $1M - you can too!)
The New York Times reported on the impact on the Manhattan market, where one Upper East Side broker had buyers pull out of purchases on two $2 million apartments because they had lost money to Madoff. A prominent NY attorney was told by several of his clients they expect to put their apartments on the market, as they depended on money from the fund to pay their mortgages and co-op fees.
And all of this doesn’t even count the commercial real estate industry - investors, brokers and builders. We’ll be watching the NY and Palm Beach markets closely. A lot of people - wealthy, average-Joes and charity foundations - lost a lot of money to Madoff, so there’s bound to be some impact on the real estate market.
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December 29th, 2008 at 12:10 am
Let me start off by saying the Madoff scandal is a terrible occurrence… but on the other side of the argument it may actually help to increase investment into real estate.
Many investors have a tough time putting their savings into something that they can not see or touch such as the stock market. When a scandal like this takes places it can raise that same fear.
Real estate is something that is tangible and can give the feeling of safety. Even if the market is down today you know that the property will not just one day disappear (as long as you have insurance).
As the fear of the stock market raises investors may be looking for other places to keep their savings safe.