It was over two years ago when, as everyone was praising the US housing recovery which has since stalled dramatically in the latest dead cat bounce for everyone but the very richest, that we exposed the biggest component of demand for the ultra-luxury segment: money laundering. Specifically, in August 2012, when isolating one of the various reasons for the latest housing bubble, we suggested that a primary catalyst for the price surge in the ultra-luxury housing segment and the seemingly endless supply of "all cash" buyers (then standing at an unprecedented 60% of all buyers lately as reported by Goldman) is a very simple one: crime. Or rather, the use of US real estate as a means to launder illegal offshore-procured money. We also identified the one key permissive feature which allowed this: the National Association of Realtors' exemption from Anti-Money Laundering provisions. In other words, all a foreign oligarch - who may or may not have used chemical weapons in their past: all depends on how recently they took their picture with the Secretary of State - had to do to buy a $47 million Florida house, was to get the actual cash to the US. Well good thing there are private jets whose cargo is never checked. As we further showed, the bulk of foreign demand for New York's most expensive properties, originated in China, Russia and various other oligarch-controlled nations, where the impetus to launder illegally obtained hot money meant an impulse to buy US real estate sight unseen and virtually at any price. And all of it, of course, all cash. No mortgages. That onslaught of foreign oligarch demand is ending, and with it so is the bubble that luxurious New York real estate found itself in on the back of some $12 trillion in central bank liquidity created out of thin air in the past 6 years. Business Week cites Manhattan real estate agent Lisa Gustin who listed a four-bedroom Tribeca loft for $7.45 million in October, expecting a quick sale. Instead, she cut the price this month by $550,000. “I thought for sure a foreign buyer would come in,” said Gustin, a broker at Brown Harris Stevens who is still marketing the 3,800-square-foot (353-square-meter) apartment at 195 Hudson St. That's ok: the foreign buyers thought the Swiss National Bank would never end the CHF floor either. And now they can no longer afford to flip four-bedrooms going for the paltry sum of just $8 million. “So many new condos are coming up right now. They’ve been building them for the past few years and now they’re really hurting the resales.” And it isn't just the end of hot money laundering. Another culprit has emerged: the soaring US Dollar: A flood of new high-priced condominiums and mansions are coming to market in New York, Miami and Los Angeles just as international buyers, who helped fuel demand in the three cities, are seeing their purchasing power wane with the strengthening dollar. Signs of a pullback may already be showing in Manhattan, where luxury-home sales have slowed amid a surge in construction of towers aimed at U.S. millionaires and foreign investors. This year, 2,386 newly built Manhattan luxury condos will be listed for sale, the most on record, data compiled by Corcoran Sunshine Marketing Group show. The brokerage defines luxury as units priced at more than $2,300 a square foot. “We’re building a very narrowly defined super-luxury product with a fairly deep pool of buyers, but the challenge is going to be the mere fact that it’s all coming at the same time,” said Jonathan Miller, president of New York-based appraiser Miller Samuel Inc. and a Bloomberg View contributor. The result: inventory and supply are both soaring, which means it is suddenly a buyer's market all over again: "With the increased supply, buyers are taking longer to make deals. New and resale apartments that went into contract in the fourth quarter for $10 million or more spent an average of 147 days on the market, almost twice as long as a year earlier, according to real estate website StreetEasy.com." And the biggest reason for the slump in demand: the one was have been warning about for the past year - the global recession has finally hit home. "Weakness in economies outside of America, a plunge in oil prices and surging dollar may be hurting demand from international buyers, who have set records in their hunt for trophy American real estate as a haven for their money. The U.S. dollar has strengthened against all of its 16 major peers except for the Swiss franc in the past 12 months." While foreigners account for about 15 percent of total Manhattan sales, they make up about 30 percent of high-end condo purchases, according to Miller. Developers of the ultra-luxury Midtown skyscrapers One57 and 432 Park Ave. have touted their sales to buyers from around the world, including South America, the Middle East, China and Russia. The worst news that any real estate agent could hear: “The trajectory right now is of a softening demand of $5 million-plus dollar apartments due to the lack of foreign buyers,” said Brian Meier, a broker at Douglas Elliman Real Estate. “If the global market doesn’t increase its demand on Manhattan residential real estate, we could see a sluggish super-luxury market going into the second and third quarter.” And what comes next are liquidation sales, as the sellers suddenly rush to find any bid before the next seller does. This in many ways mirror what is going on with the global crude market, as lower prices force even more supply, leading to even lower prices, until finally the source itself is taken out back and quietly put of their misery. It's not just New York. Here is LA: In the Los Angeles area, the number of homes sold for more than $2 million climbed 15.5 percent last year to 3,927, compared with a 41 percent growth rate in 2013, CoreLogic DataQuick said. Across the U.S., the luxury-home market has been healthier than lower-end segments, where buyers of lesser means may struggle to get mortgages. That has enticed developers to build more high-priced residences. On the Los Angeles Multiple Listing Service, there were 3,198 homes with asking prices greater than $2 million at the end of 2014, up 17 percent from a year earlier, according to Partners Trust, a Beverly Hills, California-based brokerage. The number of homes priced at more than $5 million, including new and existing properties, jumped 27 percent to 546. And Miami: In Florida’s Miami-Dade County, which skews heavily toward Latin American buyers, almost 30,000 new condos are proposed, on the drawing board or under construction east of Interstate 95, according to CraneSpotters, a Miami-based consulting firm. There have been 71 new towers with 19,158 units proposed in greater downtown Miami since the latest boom began in 2011, compared with 84 properties with 22,200 condos built from 2003 to 2010. The spot-on soundbite: “Foreign buyers are the purchasers who saved the South Florida condo market during last dramatic downturn,” said Peter Zalewski, principal of CraneSpotters. “Ironically, foreign buyers are going to be the ones to push condo prices back in a tailspin because of the drop in commodity prices and weakening foreign currencies.” It is so bad even the eternally cheerful Larry Yun took a break from cooking the NAR books to provide a statement or two: “We may begin to see some dent in foreign purchases” as overseas economies slow, Lawrence Yun, the Realtors group’s chief economist, said in a phone interview. “The strength in the dollar makes it pricier to purchase in the U.S.” Without doubt the biggest source of lost demand is Russians, who have lost about half of their purchasing power in just the past several months: In February 2012, a penthouse at New York’s 15 Central Park West was purchased for the daughter of Russian billionaire Dmitry Rybolovlev for $88 million, a record at the time. The condo, which would have cost about 2.6 billion rubles at the time of the closing, would cost more than 5.7 billion rubles at today’s rate. “There’s no question the ruble falling as precipitously as it has put a damper on things,” Marlen Kruzhkov, an attorney with New York-based Gusrae Kaplan Nusbaum PLLC, who represents foreign buyers in U.S. real estate deals. “But it works two ways. There are those people it’s going to prevent from buying. And at the end of the day, there are those people it just reinforces for them the reasons they’re moving their money out of the country in the first place.” There is only one bright spot left: Chinese buyers, who continue to find ways to find money laundering loopholes out of China and to park their illegal cash in the US... Chinese buyers -- who spent $22 billion on U.S. homes in the year through March, up 72 percent from a year earlier, according to the National Association of Realtors -- may be an exception to the pullback. Their purchases in Manhattan are “increasing significantly,” said Pamela Liebman, president of brokerage Corcoran Group. ... but that too will change as the Chinese economy slows down dramatically, and as the consequences of the domestic Chinese housing bust spread through the remaining sectors of the economy. And while for now only the stock market appears immune, soaring on the back of indirect central bank liquidity injections and the government's explicit green light to get all the habitual gamblers involved, the days of 5% daily Shanghai Composite gains are also numbered. The only question is when the Chinese stock bubble follows its housing bubble. But back to New York, where as Bloomberg reports, "deals have slowed to a trickle": At One57, the Extell Development Co. project that set off the construction boom, deals slowed to a trickle amid competition from newer properties reaching the market. Just one contract was signed in each of the first three quarters of 2014, Extell said in a filing on the Tel Aviv Stock Exchange, where the company sells debt to investors. As of the end of September, 24 of the project’s 94 condos were unsold. It wasn’t like that when sales began in 2011. Deals at One57 totaled $1 billion in the first six months, including a contract for a duplex penthouse for $100.5 million, which set a New York price record when it was completed last month. The conclusion: “Some people will get a little panicky because things are not selling as fast,” Steinberg said. “But what we experienced over the past two years was not reality. That was a moment in a century.” Indeed, and we will add that what we experienced in the global capital markets, and not just in housing in the past five years was not reality. It was a central-bank driven bubble of epic proportions. A bubble that is now ending. The best news, however, is that the days of obnoxious TV shows catering to pampered billionaire oligarchs and their spoiled trust-funded children, such as "Million Dollar Listing" are finally numbered.