In the past bust, it was the fast-growing exurbs, aspirational home of the middle and working classes, that imploded, driving millions of people into foreclosure. Aided by dicey lending practices from the private sector, devastation was most precipitous in states such as California where public policy helped drive to unsustainable levels.
This time the biggest problems emerge at the upper-end market, particularly the 80-90 percent of all new multi-family construction that is considered “luxury.” The first signs of diminished demand, and falling prices, can be seen in high-end markets such as Manhattan, San Francisco, London and Sydney, in part reflecting a fall in foreign investment, and shifting demographics that see more millennials entering prime child-bearing ages.
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