The much-awaited Wall Street bonus news have come out last week, with Goldman Sachs announcing the highest annual earnings in Wall Street history, allowing the investment bank to pay out a whopping $16 billion to eligible employees. That is over $600,000 per employee, with some high producers possibly earning as much as $100 million. Other investment banks did very well also; Morgan Stanley said that it will pay its CEO John Mack $40 million in 2006, also a Wall Street record for a CEO.
Doing naked cart wheels are, of course, people who work at Goldman, and real estate brokers. Salivating at the prospect of money that will be thrown into real estate, Pam Liebman, the CEO of Corcoran, a large NY real estate brokerage, said, “When these guys learn what their bonuses are, we are among the first people they call…. They call their mothers, and then their real estate brokers.” (The NY Times, December 13, 2006)
For people like me who have been waiting for prices to fall even further, this is not good news. The real estate appraisal firm Miller Samuels has produced a correlation chart between Wall Street bonuses and real estate prices in Manhattan, and surprise, surprise, they are inextricably linked!
Brokers are already reporting brisk sales in as early as November (“Bonus Season’s Greetings,” New York Magazine, December 4, 2006). A friend who is a broker confirms that the past two months have been “very, very busy” for her.
While the rest of the country is languishing in a so-called “real estate freeze,” New York defies that trend and sends its property prices through the roof once again, beyond reach of the likes of us, who did not earn those bonuses.