5 ms·

I can’t help but think of Snow Crash where Hiro Protagonist (and many others) lived in the U-Store-It former storage facility. This is the the real cost of all

by cletus 9y ago

I can’t help but think of Snow Crash where Hiro Protagonist (and many others) lived in the U-Store-It former storage facility. This is the the real cost of allowing (particularly foreign) capital to be parked in real estate in the developed world. In NYC for example most new developments are ultra-luxury not because building affordable apartments is uneconomic, it’s just that the ultra-luxury end is way more profitable. But sure let’s just pass a massive tax cut for the wealthy instead at a time when corporations are making record profits.

jjeaff 9y ago
The thing is, this money being parked from overseas isn't even benefitting the local economies. It just props up property values for a select few homeowners. The people buying these houses are just leaving them empty. There has been some private investigation of some of the homes being bought and built in BelAir right now. One home was found to be owned by a Nigerian politician through multiple layers of shell companies. This politician has no business owning an $80 million home. If we simply cut out the corrupt and stolen money flooding into these markets I think we would find it is making for a large chunk of it.
- TuringNYC 9y ago
  For those interested in the topic, NYTimes did a great article: Towers of Secrecy Stream of Foreign Wealth Flows to Elite New York Real Estate By LOUISE STORY and STEPHANIE SAULFEB. 7, 2015 https://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html?_r=0 https://www.nytimes.com/2015/02/08/nyregion/stream-of-foreig...
- cletus 9y ago
  It’s worse than that: they’re not even payin* their fair share of property taxes either. For example: - 157 West 57th St #77, asking $49m, paying $4,200 in monthly taxes [1] - 301 West 53rd St #3E, asking $1.85m, paying $1,681 in monthly taxes [2] Why is an apartment asking 25 Times as much only paying 2.5x the property taxes? You can largely blame Bloomberg and Andrew Cuomo for this. [1] https://www.elliman.com/new-york-city/one57-157-west-57-street-77-manhattan-xmokzyz https://www.elliman.com/new-york-city/one57-157-west-57-stre... [2] https://www.elliman.com/new-york-city/fifty-third-and-eighth-301-west-53-street-3e-manhattan-rcnnhns https://www.elliman.com/new-york-city/fifty-third-and-eighth...
  - rcpt 9y ago
    Those property taxes sound high! I pay over $3500 to rent a house in Santa Cruz while my landlord only pays $2700 per year in property tax. The place is worth $1-2M depending on what website I'm checking.
    - deleted 9y ago
      [deleted]
    - astura 9y ago
      I pay $4,500/year in property taxes on a house that's worth less than $250,000.
    - pound 9y ago
      How much do you know about Proposition 13 in CA? That's also one of the reasons why real estate market is fucked in CA (together with zoning and 'let's not build enough so our assets will cost even more')
      - rcpt 9y ago
        I know enough to blame all the state's financial problems on it.
    - tyingq 9y ago
      It varies wildly. Property taxes in Texas, for example, could easily be $15k for a $450k house.
    - segmondy 9y ago
      I paid $3600 on $100k property in Detroit 10yrs ago. Property tax in most places is not based on the amount the house will sell for but based on what it original sold for and then it grows slowly. So Perhaps your landlord bought the property for $200k many years ago and the property tax was $1k and has now grown to $2.7k.
    - cletus 9y ago
      They are high. Apartment buildings in NYS are taxed so ARV (assessed rental value) so a $3M brownstone in Park Slope might only pay $700/month. A $3m condo might pay 3-4x that. NYC can’t fix this and the state won’t because it’s beholden to SFH owners upstate who (now) don’t pay their fair share and don’t want to start now. Additionally NYS doesn’t have Prop 13 but it has lots of things that look like it. Reduced increases, caps on rates, etc that greatly benefit incumbents. Same as in California people raise the specter of evicting or bankrupting the elderly from their ancestral home if this was changed. It’s a false dilemma. You could easily relieve taxes because of hardship (or simply being over 65 for a principal residence) on a case by case basis.
- losteric 9y ago
  Well it's that, plus low density zoning regulations
- paulpauper 9y ago
  But who built the $80 million home? Such spending, as extravagant and wasteful as it may seem, is an exchange of capital for a product and creates jobs. Foreign investment is good for recipients of such investment, by spurring demand.
  - jjeaff 9y ago
    It creates fewer jobs, for a shorter period of time than you would think. You can only get so many people on a small property like that. And they still seem to get them done in less than a year.
grandmczeb 9y ago
> This is the the real cost of allowing (particularly foreign) capital to be parked in real estate in the developed world. It's amazing to me that people don't recognize this as xenophobia when other forms ("Mexicans are taking our jobs!", "Migrants don't have the same values!") are so readily called out. High housing prices are a self inflicted problem. When you mix supply restrictions with tax breaks explicitly designed to keep people from moving, you end up pricing people out. Not surprising.
- antif 9y ago
  California Proposition 13, to me, has been a ticking time-bomb of a 'youth tax' over the past forty years. As much as I respect that it serves to protect the vulnerable and elderly from heightening costs, it has unduly shifted that burden onto everyone else. I believe todays homelessness is surely in part being caused by this untouchable stick-in-the-mud legislation. Property tax appraisals for neighboring houses are wildly variant, some times by a factor of 20x (eg, home market value of two million or more, but taxed on a state appraised value of 100-200k). So a young person buying their first home seemingly must always pay a significantly higher annual property tax when compared with the family next-door who've kept the property family owned for a generation.
  - joejerryronnie 9y ago
    If you want to see the most bi-partisan, passionate, and active opposition in the history of California, try taking on Prop 13. This will never get repealed because it's the one thing every politician knows will rally the vast majority of voters, regardless of ideology, and result in an immediate political death sentence.
  - orangecat 9y ago
    As much as I respect that it serves to protect the vulnerable and elderly from heightening costs And I would even question that. If your house has appreciated so much that you can't afford the property taxes, so you're "forced" to sell it for a huge profit...maybe in an ideal world that wouldn't happen, but it's nowhere near the top of my list of injustices that need to be fixed.
nerfhammer 9y ago
Foreign capital is betting the locals will never ever allow real estate prices to fall.
cmurf 9y ago
Republicans are just serving their true masters. [1] Studies show immigration has a net positive on the economy, whereas the foreign owned real estate equivalent shows it has a deleterious effect overall with a vertical plus for those selling and moving elsewhere. But this is a function of too low taxes at the top end, and cheap borrowing costs. There's a glut of money that has to go somewhere. So it's getting stuffed into the stock, bond, and real estate markets, rather than into businesses and workers. [1] Graham: 'Financial contributions will stop' if GOP doesn't pass tax reform http://thehill.com/policy/finance/359606-graham-financial-contributions-will-stop-if-gop-doesnt-pass-tax-reform http://thehill.com/policy/finance/359606-graham-financial-co... It's all about financial contributions, and ensuring there isn't a level playing field with the competition in particular in primaries. Just imagine how difficult it would be to convince them to get money out of politics entirely.
nradov 9y ago
Part of the problem is that the real estate industry isn't subject to the same "know your customer" rules as other financial services. If a foreigner wants to invest in US stocks then the broker is required to do at least some basic validation that the customer's money is legitimate, and report suspicious transactions to the government. So a lot of the money laundering by corrupt foreign politicians and oligarchs now goes through real estate instead.

by cletus 9y ago

jjeaff 9y ago

The thing is, this money being parked from overseas isn't even benefitting the local economies. It just props up property values for a select few homeowners. The people buying these houses are just leaving them empty. There has been some private investigation of some of the homes being bought and built in BelAir right now. One home was found to be owned by a Nigerian politician through multiple layers of shell companies. This politician has no business owning an $80 million home. If we simply cut out the corrupt and stolen money flooding into these markets I think we would find it is making for a large chunk of it.

TuringNYC 9y ago
For those interested in the topic, NYTimes did a great article: Towers of Secrecy Stream of Foreign Wealth Flows to Elite New York Real Estate By LOUISE STORY and STEPHANIE SAULFEB. 7, 2015 https://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html?_r=0 https://www.nytimes.com/2015/02/08/nyregion/stream-of-foreig...
cletus 9y ago
It’s worse than that: they’re not even payin* their fair share of property taxes either. For example: - 157 West 57th St #77, asking $49m, paying $4,200 in monthly taxes [1] - 301 West 53rd St #3E, asking $1.85m, paying $1,681 in monthly taxes [2] Why is an apartment asking 25 Times as much only paying 2.5x the property taxes? You can largely blame Bloomberg and Andrew Cuomo for this. [1] https://www.elliman.com/new-york-city/one57-157-west-57-street-77-manhattan-xmokzyz https://www.elliman.com/new-york-city/one57-157-west-57-stre... [2] https://www.elliman.com/new-york-city/fifty-third-and-eighth-301-west-53-street-3e-manhattan-rcnnhns https://www.elliman.com/new-york-city/fifty-third-and-eighth...
- rcpt 9y ago
  Those property taxes sound high! I pay over $3500 to rent a house in Santa Cruz while my landlord only pays $2700 per year in property tax. The place is worth $1-2M depending on what website I'm checking.
  - deleted 9y ago
    [deleted]
  - astura 9y ago
    I pay $4,500/year in property taxes on a house that's worth less than $250,000.
  - pound 9y ago
    How much do you know about Proposition 13 in CA? That's also one of the reasons why real estate market is fucked in CA (together with zoning and 'let's not build enough so our assets will cost even more')
    - rcpt 9y ago
      I know enough to blame all the state's financial problems on it.
  - tyingq 9y ago
    It varies wildly. Property taxes in Texas, for example, could easily be $15k for a $450k house.
  - segmondy 9y ago
    I paid $3600 on $100k property in Detroit 10yrs ago. Property tax in most places is not based on the amount the house will sell for but based on what it original sold for and then it grows slowly. So Perhaps your landlord bought the property for $200k many years ago and the property tax was $1k and has now grown to $2.7k.
  - cletus 9y ago
    They are high. Apartment buildings in NYS are taxed so ARV (assessed rental value) so a $3M brownstone in Park Slope might only pay $700/month. A $3m condo might pay 3-4x that. NYC can’t fix this and the state won’t because it’s beholden to SFH owners upstate who (now) don’t pay their fair share and don’t want to start now. Additionally NYS doesn’t have Prop 13 but it has lots of things that look like it. Reduced increases, caps on rates, etc that greatly benefit incumbents. Same as in California people raise the specter of evicting or bankrupting the elderly from their ancestral home if this was changed. It’s a false dilemma. You could easily relieve taxes because of hardship (or simply being over 65 for a principal residence) on a case by case basis.
losteric 9y ago
Well it's that, plus low density zoning regulations
paulpauper 9y ago
But who built the $80 million home? Such spending, as extravagant and wasteful as it may seem, is an exchange of capital for a product and creates jobs. Foreign investment is good for recipients of such investment, by spurring demand.
- jjeaff 9y ago
  It creates fewer jobs, for a shorter period of time than you would think. You can only get so many people on a small property like that. And they still seem to get them done in less than a year.

grandmczeb 9y ago

> This is the the real cost of allowing (particularly foreign) capital to be parked in real estate in the developed world. It's amazing to me that people don't recognize this as xenophobia when other forms ("Mexicans are taking our jobs!", "Migrants don't have the same values!") are so readily called out. High housing prices are a self inflicted problem. When you mix supply restrictions with tax breaks explicitly designed to keep people from moving, you end up pricing people out. Not surprising.

antif 9y ago
California Proposition 13, to me, has been a ticking time-bomb of a 'youth tax' over the past forty years. As much as I respect that it serves to protect the vulnerable and elderly from heightening costs, it has unduly shifted that burden onto everyone else. I believe todays homelessness is surely in part being caused by this untouchable stick-in-the-mud legislation. Property tax appraisals for neighboring houses are wildly variant, some times by a factor of 20x (eg, home market value of two million or more, but taxed on a state appraised value of 100-200k). So a young person buying their first home seemingly must always pay a significantly higher annual property tax when compared with the family next-door who've kept the property family owned for a generation.
- joejerryronnie 9y ago
  If you want to see the most bi-partisan, passionate, and active opposition in the history of California, try taking on Prop 13. This will never get repealed because it's the one thing every politician knows will rally the vast majority of voters, regardless of ideology, and result in an immediate political death sentence.
- orangecat 9y ago
  As much as I respect that it serves to protect the vulnerable and elderly from heightening costs And I would even question that. If your house has appreciated so much that you can't afford the property taxes, so you're "forced" to sell it for a huge profit...maybe in an ideal world that wouldn't happen, but it's nowhere near the top of my list of injustices that need to be fixed.

nerfhammer 9y ago

Foreign capital is betting the locals will never ever allow real estate prices to fall.

cmurf 9y ago

Republicans are just serving their true masters. [1] Studies show immigration has a net positive on the economy, whereas the foreign owned real estate equivalent shows it has a deleterious effect overall with a vertical plus for those selling and moving elsewhere. But this is a function of too low taxes at the top end, and cheap borrowing costs. There's a glut of money that has to go somewhere. So it's getting stuffed into the stock, bond, and real estate markets, rather than into businesses and workers. [1] Graham: 'Financial contributions will stop' if GOP doesn't pass tax reform http://thehill.com/policy/finance/359606-graham-financial-contributions-will-stop-if-gop-doesnt-pass-tax-reform http://thehill.com/policy/finance/359606-graham-financial-co... It's all about financial contributions, and ensuring there isn't a level playing field with the competition in particular in primaries. Just imagine how difficult it would be to convince them to get money out of politics entirely.

nradov 9y ago

Part of the problem is that the real estate industry isn't subject to the same "know your customer" rules as other financial services. If a foreigner wants to invest in US stocks then the broker is required to do at least some basic validation that the customer's money is legitimate, and report suspicious transactions to the government. So a lot of the money laundering by corrupt foreign politicians and oligarchs now goes through real estate instead.