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In DC, there's a big glut in foreign capital flowing in from foreign oligarchs and elites, particularly from Russia and China. Residential properties in so-call
by s_q_b 10y ago
In DC, there's a big glut in foreign capital flowing in from foreign oligarchs and elites, particularly from Russia and China. Residential properties in so-called "safe cities" are both a form of investment and a potential life-raft should the political situation change in their nations.In addition to the artificially low supply created by extreme height limitations, this has caused prices to skyrocket.
The apartment in which my girlfriend and I live now was a cash purchase after only three days on the market with no escrow. It had to be, or someone else would have bested it. If you need a loan to buy? Forget it.
Meanwhile, there are six immaculately tended walk-ups on the block that have been completely empty for the past year, but for the staff.
- conception 10y agoVancouver recently enacted an anti foreign buyer tax that seems to have almost completely stopped the practice. Curious if we will start to see more and more of this local protionism.
- jewbacca 10y ago> almost completely stopped the practice That is way overselling any evidence of what's happened. The tax was enacted less than a month ago. Volumes are way down right now, but the effect on prices are uncertain. I think the consensus is that people are in wait-and-see mode.
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- antisthenes 10y agoUnless every desirable city introduces this tax uniformly, doesn't this just shift the burden from Vancouver onto other cities?
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- r00fus 10y agoThis is why it should go viral. Wealthy individuals/ buying houses in droves to sit empty does not benefit anyone in the long run. What happens when the bubble pops?
- jonknee 10y agoI think they should be allowed to buy the homes, but then face stiff property taxes (with a homestead exemption for actual residents). The property taxes on Billionaire's Row in NYC are often absurdly low: http://www.citylab.com/housing/2015/05/why-billionaires-dont-pay-property-taxes-in-new-york/389886/ http://www.citylab.com/housing/2015/05/why-billionaires-dont...
- tezza 10y agoThey will pay pensioners to live there 'on paper' to meet your homestead requirement. The whole tax penalty is thwarted that way
- notfromhere 10y agoAt least they'll be occupied that way. Maybe they can even have whole families move in there, with some sort of agreement that they receive a monthly payment in exchange.
- msh 10y agoIf you realitet the oner to live there and pay property taxes is quite risky to use a straw man.
- slavik81 10y agoRight now I'm paying rent like a sucker when I could be paid to live here instead? Sounds good to me.
- bradleyjg 10y agoHappily the 421-a exemption program referenced in that article was allowed to expire. Not because of a consensus that it was a bad idea (which it was) but because of a pissing match between the governor and the mayor. We have to take our victories where we can get them; hopefully they'll continue fighting forever. We still have structural problems in the city property tax code -- for example condo and co-op buildings have to be taxed as if they were rental buildings, a complex calculation that generally undervalues them. But if and when those are fixed, I think full property taxes are would be enough. I don't see the need for a punitive rate on top of that. At least not in NYC, other cities may have a bigger problem with absentee owners.
- PhasmaFelis 10y agoIt does. Should Vancouver not act to protect its own citizens to the best of its ability, then?
- mabbo 10y agoThe same logic works for all Protectionist legislation. Yet free trade has lowered the costs of nearly every good in our lives.
- billmalarky 10y agoFree trade maximizes GDP at the cost of further wealth inequality within the closed system of a nation. There's a tipping point coming fairly soon where voters will logically prefer the short term benefits of protectionism vs additional inequality. If capitalists want to continue down the path of free trade, they better be prepared to redistribute the additional wealth generated. That or find a way to disenfranchise a whole lot of pissed off citizens.
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- neffy 10y agoNo it hasn't really. Technological development has lowered the costs and availability of most things in our lives. If you look at the actual practices of governments and individuals over the last few centuries you won't find much truly free trade. You'll find all kinds of protectionism, exploits of positional control over markets, currency flows (I'm looking at you China), and the occasional super-power deciding to to have a war on ... well slavery was the one that mostly worked. But free trade? Well, most countries agree that they should be allowed to freely export whatever they want... imports are another matter of course.
- hx87 10y agoOther cities are welcome to more affordable housing and extra tax revenue by introducing the same tax. Win-win for everyone except wealthy foreign buyers, no?
- Grishnakh 10y agoYes. Assuming the tax actually works as expected (it's probably too soon to tell now), the burden will be shifted onto other cities that are too stupid or dysfunctional to enact the same tax. I don't see a problem here. The problem will correct itself eventually, with regular citydwellers all moving to cities smart enough to enact these laws, and abandoning cities like London that become completely unaffordable. Eventually the latter cities will collapse, and these wealthy foreigners' properties will be worthless, like all the $100 houses in Detroit.
- mabbo 10y agoMy condo is Toronto is going up in value pretty quickly. I'm still 100% opposed to the Vancouver tax, but in theory it's making my assets increase in value.
- darryl42 10y agoMore sales records are being set even after the new tax http://vancouversun.com/business/real-estate/tax-shows-no-sign-of-slowing-luxury-condo-market-as-bosas-cardero-project-sets-new-high-price http://vancouversun.com/business/real-estate/tax-shows-no-si...
- bogomipz 10y agoRussia, New York, LA, S.F., all the same. And there are property developers now who are developing property not for the rank and file of those cities but to attract the hot money from non-residents/non citizens who may only use them a few months out of the year if at all. There doesn't seem to be an in sight either. Related is this story right now: http://www.nytimes.com/2016/07/21/world/asia/1mdb-malaysia-us-assets-seized.html http://www.nytimes.com/2016/07/21/world/asia/1mdb-malaysia-u...
- afarrell 10y agoI feel like there is a massive opportunity to be had here from managing and renting out these places.
- chadgeidel 10y agoI'm pretty sure foreign oligarchs aren't interested in AirBnB-style arrangements.
- pavel_lishin 10y agoMaybe afarrell wasn't talking about the oligarchs being the ones renting out the spaces.
- chadgeidel 10y agoThat's a fair point, and this is merely my opinion, but if I could afford housing all over the world, I certainly wouldn't want to deal with the fact that I maybe cannot go visit London/NYC/wherever on a whim and stay at my own private residence. Renting has downsides even with "perfect renting arrangements" which cannot be mitigated by a third party (well, without presumably breaking an entire host of laws).
- pavel_lishin 10y agoThat's kind of what I was jokingly suggesting; that the caretakers - who likely are the only ones who see the inside of the place for years - just surreptitiously rent it out from under the actual owner.
- jandrese 10y agoPeople dumping hundreds of millions into the market just to hide it from external forces aren't interested in being landlords.
- tome 10y ago
- mmmBacon 10y agoThe problem is much worse here in SV. Lots of all cash buyers from abroad. When I was house hunting last year every house we lost was won buy an all cash foreign buyer. I also know many families where this was also the case.
- TheCowboy 10y agoI believe problems with the metro system becoming completely unreliable have also caused prices in DC itself to increase, since it forces people who work in DC to live closer to their jobs. There is a lot of new construction in different parts of Virginia along the orange line, but the vacancy rates are extremely high. Fewer people want to pay a premium to live by an orange line station with the current problems.
- leviathant 10y agoThe same thing's happening in Philadelphia, so no doubt New York and DC are running out of places to snatch up. It's insane. I landed a pretty sweet deal on an old building close to the Delaware River for ~$265,000. A vacant lot near us sold for about the same a couple of years before that. This year, the lot behind us went on the market for $600,000 - a number I thought was pretty absurd. But two days after it had been on the market, I saw a couple of guys walking through the vacant lots. I introduced myself and asked if they had any questions about the neighborhood. In a heavy accent, the younger guy asked "Who owns these other lots? Do you think they would sell them?" They wanted to buy up every vacant lot and wrap our building with condos. I mentioned the vacant lot that had just gone up for $600,000 - the older Russian smiled, saying "We make good offer. Seven hundred thousand cash." I figured maybe they were boasting. That week, the lot went off the market. On one hand, I feel like we got in when the getting was good, but on the other hand, I'm not terribly excited about what's going to get built around us. I think my general feeling about it is best summed up as, "Oh boy, here we go."
- tcoppi 10y agoIf you aren't particularly attached to the area/house, it might be time to cash out and move somewhere more reasonable.
- leviathant 10y agoWithout getting too into the details, we're improving a small performing arts space on the first floor, a little apartment on the second floor, and building larger apartment on the third floor. If I were doing this for cash, I'd have just built five stories of apartments, and could retire somewhere boring and suburban as an absentee landlord. This is more of a 'fostering the arts' and 'living in a walkable urban environment' thing. They say you can make a small fortune in theater - you start with a big fortune. You build a theater, and now you've got a small fortune ;)
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