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Do these purchases affect the NY real estate market as a whole (other than say, skewing statistics)? For lower end housing stock, homeowners usually "jump" up

Do these purchases affect the NY real estate market as a whole (other than say, skewing statistics)? For lower end housing stock, homeowners usually "jump" up to more expensive properties as they become more financially stable or as they need the room. This market seems entirely disconnected from that, but I'm not sure.

001sky 12y ago
Yes, these are only the headline grabbers. This is an old story. London has had this problem for over a decade.
michaelochurch 12y ago
Price inelasticity is worth noting. A small amount of supply destruction will make prices spike significantly. That's why NYC's legacy rent control system is such an issue. It only affects about 1-2% of apartments, but that probably pushes rents up 50% or more. So, yes, the fact that global-elite billionaire scumbags use our real estate to launder their drug/blood money is a huge issue. For lower end housing stock, homeowners usually "jump" up to more expensive properties as they become more financially stable or as they need the room. That seems to be a Boomer thing. They bought the 3000 SF houses that are impossible to maintain unless you hire maids (which Americans don't like to do, even though at $20/h they're still cheaper than doing your own cleaning). I think the young generation values freedom and experiences (e.g. travel) more than stuff and space. Frankly, I find McMansions depressing. Unfortunately, in many cities it's impossible to get a 1000 SF place at an appropriate price. You end up buying or renting 2000+ because that's all there is, unless you're talking about seriously defective housing (e.g. no laundry in the building, no dishwasher.)
- pierrealexandre 12y ago
  Isn't the phenomenon you describe extreme price elasticity rather than inelasticity? Also, any source for your assertion about the effect of rent control on rents in NYC? I'm very interested in this if you have it.
  - kyllo 12y ago
    The term "inelasticity" describes consumer demand, rather than the price. As a good becomes increasingly scarce, the price will rise. But when demand is highly "elastic," the price rise will be mitigated by consumers changing their behavior or seeking a substitute good (in this scenario, by relocating their residence away from NYC). In other words, demand elasticity means that consumers can decide not to pay the higher price because they have alternative options. In the case of NYC housing, the demand is inelastic, meaning that the price increases stick because enough people do not have any acceptable alternative to paying it (likely because employment in their chosen profession requires being physically located in or near Manhattan).
- supahfly_remix 12y ago
  Agreed that money laundering is a big issue, but are you saying that these properties affect prices for homes purchased by normal people? Are these properties are affected by rent control, or were you using that as an example?

001sky 12y ago

Yes, these are only the headline grabbers. This is an old story. London has had this problem for over a decade.

michaelochurch 12y ago

Price inelasticity is worth noting. A small amount of supply destruction will make prices spike significantly. That's why NYC's legacy rent control system is such an issue. It only affects about 1-2% of apartments, but that probably pushes rents up 50% or more. So, yes, the fact that global-elite billionaire scumbags use our real estate to launder their drug/blood money is a huge issue. For lower end housing stock, homeowners usually "jump" up to more expensive properties as they become more financially stable or as they need the room. That seems to be a Boomer thing. They bought the 3000 SF houses that are impossible to maintain unless you hire maids (which Americans don't like to do, even though at $20/h they're still cheaper than doing your own cleaning). I think the young generation values freedom and experiences (e.g. travel) more than stuff and space. Frankly, I find McMansions depressing. Unfortunately, in many cities it's impossible to get a 1000 SF place at an appropriate price. You end up buying or renting 2000+ because that's all there is, unless you're talking about seriously defective housing (e.g. no laundry in the building, no dishwasher.)

pierrealexandre 12y ago
Isn't the phenomenon you describe extreme price elasticity rather than inelasticity? Also, any source for your assertion about the effect of rent control on rents in NYC? I'm very interested in this if you have it.
- kyllo 12y ago
  The term "inelasticity" describes consumer demand, rather than the price. As a good becomes increasingly scarce, the price will rise. But when demand is highly "elastic," the price rise will be mitigated by consumers changing their behavior or seeking a substitute good (in this scenario, by relocating their residence away from NYC). In other words, demand elasticity means that consumers can decide not to pay the higher price because they have alternative options. In the case of NYC housing, the demand is inelastic, meaning that the price increases stick because enough people do not have any acceptable alternative to paying it (likely because employment in their chosen profession requires being physically located in or near Manhattan).
supahfly_remix 12y ago
Agreed that money laundering is a big issue, but are you saying that these properties affect prices for homes purchased by normal people? Are these properties are affected by rent control, or were you using that as an example?