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Dirty foreign money is more of a problem in NYC real estate than most people realize. Unless we do something about it, it's only going to get worse. London is e

Dirty foreign money is more of a problem in NYC real estate than most people realize. Unless we do something about it, it's only going to get worse. London is even farther gone than we are. It's ugly. Most people see it as a non-problem because they assume that they're in a separate property market from the billionaires, and because the billionaires are such a small set of people. What they don't realize is that housing is an extremely inelastic good, so even a 1% supply destruction is going to have major effects on price-- possibly a 20, 50, or even 100 percent bump. It's not about high incomes (NYC incomes are high, but not that high for average people) or some amorphous "people want to live here". It's demand inelasticity coupled with our failure to keep dirty foreign money out. And the ultra-rich and middle-income markets do interact, if not directly. There's a push-down effect. If dirty billionaires are taking apartments that should be "only" $5-10 million at 5x prices, then the working rich get pushed down into upper-middle-class housing, the upper-middle-class gets pushed into middle-class housing, and on down the line, with the working classes getting absolutely fucked and having 1+ hour commutes. Moreover, in addition to the foreign scumbag money (which is a problem on the West Coast, just as in New York) you have a lot of gray-water foreign money: overseas speculators who aren't criminals themselves but are betting on increased scumbag-fueled demand for U.S. real estate.

rayiner 12y ago
People don't think enough about the dirtiness of foreign money. In the Middle East, parts of Eastern Europe, and parts of Asia, the fortunates are to a much lesser degree the product of meritocracy and much more the product of oligarchs robbing countries of their resource wealth and laundering it abroad.
stegosaurus 12y ago
In London the idea of a 'seperate property market' is totally bunk; it seems like every day a new story comes in with social housing being demolished to fill with fancy apartments. The residents then have to be rehoused somewhere. There are also tens of thousands (possibly 100K+) empty residences in London. The other problem is that those who already own are both insulated from the effects (mortgage payments from 10 years ago) and stand to benefit if they ever decide to move out of the capital. It's a huge issue. Re 1 hour commutes; London is far enough gone now that 'the working class' need to cohabit to manage at all. I have no idea how service workers get by - either they live with friends and family, or they house share. 7-800pm (~9000pa) is pretty much the bare minimum outside of remote areas with no transport links; UK minimum wage is roughly 13K. State benefits jump in to cover the shortfall. Huge numbers of young people are staying in the family home for much longer. At least they can stay - but it also affects talent moving to the area. A lot of very skilled people are going to be put off by the prospect of permanently 'existing' rather than 'living' in and around the capital.
- stegosaurus 12y ago
  Oh; and to comment on the 'efficient use of land' argument that often comes up; I tend to think that those who were brought up in a certain area, or have some sort of personal attachment (family, significant other) do deserve some thought. What we're seeing now is just people downgrading and downgrading, professionals living in tiny apartments, the prospect of raising a family disappearing, housing rising to encompass higher and higher shares of income - but demand is not really letting up. It reminds me of working hours. The economy is not a zero sum game, but after a point it seems as if people are just competing for competition's sake, and everyone suffers as a result - stratification of people with long hours and people with zero/unstable hours, disregard for work/life balance, etc.
- mavdi 12y ago
  The situation in London is very tragic. I think it will stop to function very soon.
sfk 12y ago
Could you stop downvoting michaelochurch all the time? Several responses who agree with him are in the plus, this comment is <= -2. It's ridiculous.
- disputin 12y ago
  Agreed. "all the time" - is there a history behind that?
  - eevilspock 12y ago
    You can see for yourself. click on his profile and look at his comment history.
    - disputin 12y ago
      I meant what is the reason, but the comment history does have a lot of down votes. I'd search through them for a reason, but that could a while.
  - seiji 12y ago
    The point you're missing on this website: it's frequented by a disproportionate number of millionaires, millionaires who are carefully investing their money to become billionaires within 10 years, and even present-day billionaires. Any posts addressing concerns of "rich people aren't the best thing ever" often get downvoted. Maybe also related: a lot of startups take VC funding and current VC funding has shady origins. Some funds are powered by illegal russian investment money hidden through one or two layers of LPs, some is money of different questionable provenance, and some is actually clean money from sources you would expect. but, free money, so who cares if your startup is built on peasant blood money? Once you've taken VC funding, you're not just in startups anymore, you're in politics of money. Money politics are the worst kind — it blinds you to anything illegal or immoral as long as the money keeps flowing.
    - disputin 12y ago
      That presumably also explains why this post has rapidly vanished off the front page, unlike the cats in boxes story. I know, someone will tell me it's algorithmic. Indiscriminate down votes have to be met with indiscriminate up votes. What a daft situation. Edit: Ah! That also explains why explanatory comments aren't required for down votes - preferential control. I didn't realise how rigged this is.

rayiner 12y ago

People don't think enough about the dirtiness of foreign money. In the Middle East, parts of Eastern Europe, and parts of Asia, the fortunates are to a much lesser degree the product of meritocracy and much more the product of oligarchs robbing countries of their resource wealth and laundering it abroad.

stegosaurus 12y ago

In London the idea of a 'seperate property market' is totally bunk; it seems like every day a new story comes in with social housing being demolished to fill with fancy apartments. The residents then have to be rehoused somewhere. There are also tens of thousands (possibly 100K+) empty residences in London. The other problem is that those who already own are both insulated from the effects (mortgage payments from 10 years ago) and stand to benefit if they ever decide to move out of the capital. It's a huge issue. Re 1 hour commutes; London is far enough gone now that 'the working class' need to cohabit to manage at all. I have no idea how service workers get by - either they live with friends and family, or they house share. 7-800pm (~9000pa) is pretty much the bare minimum outside of remote areas with no transport links; UK minimum wage is roughly 13K. State benefits jump in to cover the shortfall. Huge numbers of young people are staying in the family home for much longer. At least they can stay - but it also affects talent moving to the area. A lot of very skilled people are going to be put off by the prospect of permanently 'existing' rather than 'living' in and around the capital.

stegosaurus 12y ago
Oh; and to comment on the 'efficient use of land' argument that often comes up; I tend to think that those who were brought up in a certain area, or have some sort of personal attachment (family, significant other) do deserve some thought. What we're seeing now is just people downgrading and downgrading, professionals living in tiny apartments, the prospect of raising a family disappearing, housing rising to encompass higher and higher shares of income - but demand is not really letting up. It reminds me of working hours. The economy is not a zero sum game, but after a point it seems as if people are just competing for competition's sake, and everyone suffers as a result - stratification of people with long hours and people with zero/unstable hours, disregard for work/life balance, etc.
mavdi 12y ago
The situation in London is very tragic. I think it will stop to function very soon.

sfk 12y ago

Could you stop downvoting michaelochurch all the time? Several responses who agree with him are in the plus, this comment is <= -2. It's ridiculous.

disputin 12y ago
Agreed. "all the time" - is there a history behind that?
- eevilspock 12y ago
  You can see for yourself. click on his profile and look at his comment history.
  - disputin 12y ago
    I meant what is the reason, but the comment history does have a lot of down votes. I'd search through them for a reason, but that could a while.
- seiji 12y ago
  The point you're missing on this website: it's frequented by a disproportionate number of millionaires, millionaires who are carefully investing their money to become billionaires within 10 years, and even present-day billionaires. Any posts addressing concerns of "rich people aren't the best thing ever" often get downvoted. Maybe also related: a lot of startups take VC funding and current VC funding has shady origins. Some funds are powered by illegal russian investment money hidden through one or two layers of LPs, some is money of different questionable provenance, and some is actually clean money from sources you would expect. but, free money, so who cares if your startup is built on peasant blood money? Once you've taken VC funding, you're not just in startups anymore, you're in politics of money. Money politics are the worst kind — it blinds you to anything illegal or immoral as long as the money keeps flowing.
  - disputin 12y ago
    That presumably also explains why this post has rapidly vanished off the front page, unlike the cats in boxes story. I know, someone will tell me it's algorithmic. Indiscriminate down votes have to be met with indiscriminate up votes. What a daft situation. Edit: Ah! That also explains why explanatory comments aren't required for down votes - preferential control. I didn't realise how rigged this is.