Paying Top Dollar for Condos, and Leaving Them Empty(nytimes.com)
nytimes.com
Paying Top Dollar for Condos, and Leaving Them Empty
http://www.nytimes.com/2013/02/12/nyregion/paying-top-dollar-for-condos-and-leaving-them-empty.html
18 comments
I live in a coop in Manhattan and I would guess at least 30% of the building doesn't live here full time or they are just holding on to the property until we surpass 2008 real estate values (from checking streeteasy and the previous sale price/ask price today). Also this isn't a super luxury place.
NYC should decrease income taxes and increase property taxes. I don't mind out of towners buying expensive condo's, but they should help pay for the services that make New York great. Right now, because their income is all earned out of town and property taxes are very low, so they are not really supporting the city.
Good luck selling that to the rest of the residents; property taxes are pretty unpopular even compared to income taxes.
And really, the better way to look at it is that the property tax paid by some multi-billionaire who only drops into town for a few weekends a year is all profit for the city. They're not using services. They're not sending their kids to public school or generating garbage or calling the police ... whatever they pay to the city each year is just gravy. They're subsidizing people who actually do live there, and would otherwise have to pay more taxes (of one form or another) for the actual services that NYC provides.
And really, the better way to look at it is that the property tax paid by some multi-billionaire who only drops into town for a few weekends a year is all profit for the city. They're not using services. They're not sending their kids to public school or generating garbage or calling the police ... whatever they pay to the city each year is just gravy. They're subsidizing people who actually do live there, and would otherwise have to pay more taxes (of one form or another) for the actual services that NYC provides.
> They're not using services.
Government services are not something that are "used" in the normal sense of the word. Central Park needs to get mowed, street lights need to be lit, police and fire protection needs to be provided, etc. regardless of whether residents are there or not.
Government services are not something that are "used" in the normal sense of the word. Central Park needs to get mowed, street lights need to be lit, police and fire protection needs to be provided, etc. regardless of whether residents are there or not.
Given that the people in question are there for just days/weeks per year, their "use" of the services seems in line with the taxes they pay. Without knowing specific numbers it's hard to get exact math, but if someone pays property tax on a multi-million dollar condo purchase and is only in the city for 3 weeks per year, surely they aren't overusing the services?
If they can afford a crash pad in new york city, then a little extra in property taxes is probably not gonna break the bank.
Another way to look at the issue, is to evaluate the 'tax collection opportunity costs' of the absentee owners. For every condo that gets bought by an absentee owner (as opposed to a local owner), NYC loses income tax, sales tax, and general economic activity (these are wealthy individuals, there spending is a boost to the local economy). By increasing the property taxes, NYC would shift the cost-benefit ratio towards those that are actually going to utilize the property (thus resulting in more income and sales taxes), while also bringing in more property taxes
Finally, if these wealthy individuals were so concerned about only paying for what they "use", then it would make a lot more sense if they just got a nice hotel room for the days/weeks per year that they are in NYC, rather than buying a condo that sits empty most of the time.
Another way to look at the issue, is to evaluate the 'tax collection opportunity costs' of the absentee owners. For every condo that gets bought by an absentee owner (as opposed to a local owner), NYC loses income tax, sales tax, and general economic activity (these are wealthy individuals, there spending is a boost to the local economy). By increasing the property taxes, NYC would shift the cost-benefit ratio towards those that are actually going to utilize the property (thus resulting in more income and sales taxes), while also bringing in more property taxes
Finally, if these wealthy individuals were so concerned about only paying for what they "use", then it would make a lot more sense if they just got a nice hotel room for the days/weeks per year that they are in NYC, rather than buying a condo that sits empty most of the time.
The "probably not gonna break the bank meme" is how class warfare propagates; it offers nothing useful in terms of creating progressive and fair tax rates.
And your hotel idea is exactly what will happen if property tax rates go up. Think through what the effects of that would be...
And your hotel idea is exactly what will happen if property tax rates go up. Think through what the effects of that would be...
"it offers nothing useful in terms of creating progressive and fair tax rates." Neither does accusing people of propagating class warfare.
Regardless of how long they're there, they still probably don't want NYC to burn down all year long, right?
Forget looking at this from a moral perspective and try the utilitarian approach. It is not socially desirable to have underutilized real estate in a place as crowded as NYC. Put it this way: Renting out an empty space is effectively the equivalent of building a new space!
I normally disapprove of using tax policy to modify behavior, but in this case it makes sense. Property tax is like the "rent" citizens pay to the government for using land. If the rent is too low, people overconsume the scarce resource.
I normally disapprove of using tax policy to modify behavior, but in this case it makes sense. Property tax is like the "rent" citizens pay to the government for using land. If the rent is too low, people overconsume the scarce resource.
Doesn't property tax raise the rent for everyone?
Possibly. But so does underused real estate, by reducing supply. And housing is a fairly inelastic good, so even a 5-10% increase in supply could have a significant impact.
Not necessarily. Rent is decided by supply, and demand. Property taxes may encourage smaller homes, which increases supply (as you can build more of them); and demand won't change at all (since people will still spend 1/3rd of their income on rent, or more if they live in NY).
They can just focus on really high tax rates for homes that aren't primary residences.
Government services are not something that are "used" in the normal sense of the word. Central Park needs to get mowed, street lights need to be lit, police and fire protection needs to be provided, etc. regardless of whether residents are there or not.
Property taxes are relatively low but they do exist. So that billionaire is probably still paying for a cop or a Sanitation worker, even if he steps in NY once a year. NYC takes almost 4% in tax, in addition to what the NY (state) takes.
Property taxes are relatively low but they do exist. So that billionaire is probably still paying for a cop or a Sanitation worker, even if he steps in NY once a year. NYC takes almost 4% in tax, in addition to what the NY (state) takes.
The article notes that the properties are seen as a safe place to store money. Surely government services directly contribute to the increasing or at least stable value of these properties? Or do you believe that those condos would hold their value just as well if there were no police force in NYC?
> The article notes that the properties are seen as a safe place to store money.
But that isn't true. Real estate isn't that safe in the first place, and they are also throwing money away by not renting it. They'd do better in buying a commercial property and renting it out.
But that isn't true. Real estate isn't that safe in the first place, and they are also throwing money away by not renting it. They'd do better in buying a commercial property and renting it out.
There is a phenomena of buying real estate in stable countries as a complicated bank account for wealthy people from unstable countries. It's like buying a pile of gold to them, except a house is harder to steal.
Vancouver is suffering from this with wealthy mainland chinese, leading to the second worst affordability ratio (housing price : average annual income) in the world. You see similar behaviors in condos in china itself.
It has very bad effects for the people who already live there, especially for the young and newly established. Younger people with better opportunities go away once they do the math and the cities eventually suffer brain drain. I would suggest a high long term unoccupied residence tax to avoid the problems of unused property in cities. Hopefully it will prod these people just a little bit to hire property management companies to avoid the tax and rent the places out.
Vancouver is suffering from this with wealthy mainland chinese, leading to the second worst affordability ratio (housing price : average annual income) in the world. You see similar behaviors in condos in china itself.
It has very bad effects for the people who already live there, especially for the young and newly established. Younger people with better opportunities go away once they do the math and the cities eventually suffer brain drain. I would suggest a high long term unoccupied residence tax to avoid the problems of unused property in cities. Hopefully it will prod these people just a little bit to hire property management companies to avoid the tax and rent the places out.
Why do you feel real estate in Manhattan (especially at the locations mentioned) isn't that safe? Some of those places have been premium properties for almost 100 years.
The rest of New York took that approach. It sucks.
I live upstate, and pay about 2.5% of my home's value in taxes. Every time they give the cops another 5% raise, it has an immediate, measurable impact on my homes value. For older people, it makes it very difficult for them to live without assistance.
Income tax is a far more just system. Poor and elderly people pay almost nothing, and everyone else contributes regardless of whether they own property.
I live upstate, and pay about 2.5% of my home's value in taxes. Every time they give the cops another 5% raise, it has an immediate, measurable impact on my homes value. For older people, it makes it very difficult for them to live without assistance.
Income tax is a far more just system. Poor and elderly people pay almost nothing, and everyone else contributes regardless of whether they own property.
This is a great answer because it points out something that a lot of people either intentionally overlook or neglect to consider: taxes have different effects on different groups of people. Try sitting in on a highschool economics class some time -- full of statements like "Inflation can't be bad, can it? We consumers can pay our debt back in an amount that's worth less in buying power than the amount we borrowed!"
Another point that I forgot to mention is that states like New York are rapacious about the collection of income tax. Setting foot within the boundaries of New York State or New York City is a taxable event for the average absentee billionaires.
Example: http://www.akerman.com/documents/res.asp?id=1089
Example: http://www.akerman.com/documents/res.asp?id=1089
Hawaii has this system where property tax is reversely proportional to occupancy by owner, so full-time islanders end up paying very little, while people who buy high-end condos for crashpads or rentals.
And what would happen to people like my grandmother who can barely afford their property taxes now. She has lived in the same house for 50 years
If she is burdened by property taxes, it's because she's living in an extraordinarily valuable house. Since property taxes are in the neighborhood of 1% of value, and real estate prices in NYC go up by several percent per year, your sainted grandmother could borrow the money to pay the property taxes, against the property, and the increase in property value would more than pay the taxes.
Rich grandmothers are not actually a problem we need to solve.
Rich grandmothers are not actually a problem we need to solve.
I'm sorry but this is just wrong on every level imaginable.
> If she is burdened by property taxes, it's because she's living in an extraordinarily valuable house.
Or because she's been on a fixed income for several years. Or because she has a lot of medical bills, as most older folks do. Or because any of a myriad of other reason that would cause someone with a piece of land to not be swimming in a pile of gold coins.
> Since property taxes are in the neighborhood of 1% of value, and real estate prices in NYC go up by several percent per year,
I can't speak to the real estate prices or property taxes so I'll take you at your word here.
> your sainted grandmother
I think we can all go without sarcastic ad hominems against our grandmothers. Jesus Christ.
> could borrow the money to pay the property taxes, against the property, and the increase in property value would more than pay the taxes.
For me, this is just the pièce de résistance of this entire convoluted argument. The idea that someone who is having trouble paying property taxes should get a loan and pay the property taxes plus interest is just laughable.
> Rich grandmothers are not actually a problem we need to solve.
You're assuming that because someone owns property in NYC that they're rich, which is clearly not the case, especially if they've been there for half a century.
> If she is burdened by property taxes, it's because she's living in an extraordinarily valuable house.
Or because she's been on a fixed income for several years. Or because she has a lot of medical bills, as most older folks do. Or because any of a myriad of other reason that would cause someone with a piece of land to not be swimming in a pile of gold coins.
> Since property taxes are in the neighborhood of 1% of value, and real estate prices in NYC go up by several percent per year,
I can't speak to the real estate prices or property taxes so I'll take you at your word here.
> your sainted grandmother
I think we can all go without sarcastic ad hominems against our grandmothers. Jesus Christ.
> could borrow the money to pay the property taxes, against the property, and the increase in property value would more than pay the taxes.
For me, this is just the pièce de résistance of this entire convoluted argument. The idea that someone who is having trouble paying property taxes should get a loan and pay the property taxes plus interest is just laughable.
> Rich grandmothers are not actually a problem we need to solve.
You're assuming that because someone owns property in NYC that they're rich, which is clearly not the case, especially if they've been there for half a century.
> You're assuming that because someone owns property in NYC that they're rich, which is clearly not the case, especially if they've been there for half a century.
You need to read what you wrote again. "Just because someone has a very valuable financial asset, doesn't make them rich." ORLY?
Let me quote from a news story:
"These listings, along with several others at the extreme low end of the market, are well below New York City's median sales price of $635,000, according to StreetEasy.com, which excludes foreclosures from its data. They're also below the bottom 10th of the city market, which has a median sales price of $160,000."
Even if your place is worth less than 95% of NYC properties, it's still worth $160,000.
Your argument is that someone who has a giant diamond but little liquid income shouldn't have to pay taxes on the diamond.
People who are having trouble paying property taxes are RICH people. Their problems go away immediately if they sell the giant asset they are holding onto, or if they even take a loan against its value (and payable when the asset is sold, perhaps when Grandma dies).
Does your argument work for all taxes? Should I just convert all my money into a single diamond and then claim I don't have any liquid cash to pay my income taxes?
"Oh, my diamond is too big to carve up to pay the taxman! Whatever shall I do!?!?"
Not actually a problem.
You need to read what you wrote again. "Just because someone has a very valuable financial asset, doesn't make them rich." ORLY?
Let me quote from a news story:
"These listings, along with several others at the extreme low end of the market, are well below New York City's median sales price of $635,000, according to StreetEasy.com, which excludes foreclosures from its data. They're also below the bottom 10th of the city market, which has a median sales price of $160,000."
Even if your place is worth less than 95% of NYC properties, it's still worth $160,000.
Your argument is that someone who has a giant diamond but little liquid income shouldn't have to pay taxes on the diamond.
People who are having trouble paying property taxes are RICH people. Their problems go away immediately if they sell the giant asset they are holding onto, or if they even take a loan against its value (and payable when the asset is sold, perhaps when Grandma dies).
Does your argument work for all taxes? Should I just convert all my money into a single diamond and then claim I don't have any liquid cash to pay my income taxes?
"Oh, my diamond is too big to carve up to pay the taxman! Whatever shall I do!?!?"
Not actually a problem.
Yeah, there's absolutely no solution to this, so the idea is a non-starter. (sarcasm)
That is why we have prop 13 in California, but that ends up either stripping tax revenue, or heavily taxing new migrants to be state (tech entrepreneurs, international people, etc) -- or, in California, both.
Not intending to be harsh, but your grandmother could use the equity established in her property, and move to somewhere where the costs of living are within her means.
In cases where the property has appreciated so much that the increase in property taxes is a burden, surely there is a corresponding increase in equity to lessen the blow.
The "CA Prop 13" option pretty much makes newcomers finance existing landowners' property taxes - not my favorite option.
In cases where the property has appreciated so much that the increase in property taxes is a burden, surely there is a corresponding increase in equity to lessen the blow.
The "CA Prop 13" option pretty much makes newcomers finance existing landowners' property taxes - not my favorite option.
Prop. 13 is a disaster in another way. Because commercial buildings are higher-valued, it is now common for them never to be sold. They are just spun out as a separate entity, and that entity changes hands.
Since they are never sold, their property tax base never increases (re-assessment happens most often after a sale). So there has also been a net transfer of property tax burden from commercial to residential property.
Since they are never sold, their property tax base never increases (re-assessment happens most often after a sale). So there has also been a net transfer of property tax burden from commercial to residential property.
More and more people are doing it too, I think. I was looking at property records, and a surprisingly large number of them were owned by various "trust"s .
> but your grandmother could use the equity established in her property, and move to somewhere where the costs of living are within her means.
Isn't keeping people in the city the whole reason you want to raise property taxes in the first place? Reduce the incentive of people to hold empty condos, so people can live in the city. So asking her to leave is the opposite goal to raising the real estate taxes.
Isn't keeping people in the city the whole reason you want to raise property taxes in the first place? Reduce the incentive of people to hold empty condos, so people can live in the city. So asking her to leave is the opposite goal to raising the real estate taxes.
But they aren't really using the city services either.
If their vacant house catches on fire or someone ransacks it, will the police or firemen not intervene?
Seriously?
Buildings with modern working sprinkler systems are rarely an issue for firefighters. As for break-ins the concierge rarely let roving bands of hooligans in to trash places / squat.
Empty luxury condos are not the fire / squat hazard that abandoned warehouses, etc are. Nice try.
It's pretty likely that someone would notice a squat in a luxury condo.
As for city services the NYPD could probably greatly improve their budget by not unconstitutionally stopping and frisking people.
Buildings with modern working sprinkler systems are rarely an issue for firefighters. As for break-ins the concierge rarely let roving bands of hooligans in to trash places / squat.
Empty luxury condos are not the fire / squat hazard that abandoned warehouses, etc are. Nice try.
It's pretty likely that someone would notice a squat in a luxury condo.
As for city services the NYPD could probably greatly improve their budget by not unconstitutionally stopping and frisking people.
The city costs money to run regardless, and the people buying crashpads there still want it to be the NYC they bought into when they end up sleep there.
What is the probability that a condo in which no appliances are being used will catch fire?
Because somebody who owns a condo and is there for 3 weeks a year is sucking up city resources as fast as they can?
"Then there is the $88 million crash pad at 15 Central Park West, bought last year by a trust linked to Ekaterina Rybolovleva, then 22 years old."
Can somebody send me the AirBNB link to that one please?
Can somebody send me the AirBNB link to that one please?
Or her okcupid profile... :)
Eh: http://i.imgur.com/i8L0JUW.jpg
She looks much older than 22. Then again, with all that money, you'd never have to worry about finding funding for a startup again.
She looks much older than 22. Then again, with all that money, you'd never have to worry about finding funding for a startup again.
For the record, empty real estate is the norm over here in China. The government dissuades capital exodus, a strategy which is also partly assisted by cultural and linguistic challenges. The result has been that many people have simply bought, developed, and sat on real estate right across the country, a huge proportion of which is empty. The really poor people (most people) cannot afford anything, and even if you do "buy", it's only a lease from the government for under a hundred years. In other words, even if real estate is perceived as a safe haven, in fact it's not. Nobody's comfortable. Everyone's constantly on edge. The older generation, despite opening their eyes to the world, cling desperately to their children as insurance against the coming winds of change. (And the 'typical' family structure: 4 grandparents, 2 parents, 1 child.)
This was the reason to allow squats in Amsterdam. It was 'legal' to squat a building or appartment that had been empty for 12 months. Moreover, the burden of proof (for new plans with the building and/or use in the preceding 12 months) was on those seeking to evict.
Now squatting is illegal again.
Now squatting is illegal again.
I live in a Vancouverism condo and about half the units on my floor are currently empty.
http://en.wikipedia.org/wiki/Vancouverism
These residents winter in Hong Kong, Phoenix, San Diego, etc. I don't really blame them. I'd rather spend the rainy months in a warmer climate, too.
I would imagine that the case may be similar for New York. If you can afford a multi-million dollar place in New York, you can probably afford another multi-million dollar place in some other place, too.
These residents winter in Hong Kong, Phoenix, San Diego, etc. I don't really blame them. I'd rather spend the rainy months in a warmer climate, too.
I would imagine that the case may be similar for New York. If you can afford a multi-million dollar place in New York, you can probably afford another multi-million dollar place in some other place, too.
Others, however, describe living in a deserted piggy bank as something else: lonely
If you live in New York, even in an otherwise empty building, and feel lonely, you're doing it wrong.
If you live in New York, even in an otherwise empty building, and feel lonely, you're doing it wrong.
Actually, one of the ironies of living in a big city like New York is that even with all of the options, loneliness is more prevalent[1].
[1]: http://www.aeonmagazine.com/being-human/olivia-laing-me-lone...
[1]: http://www.aeonmagazine.com/being-human/olivia-laing-me-lone...
I live in São Paulo (the whole metropolis has 30 million people) and I feel horribly lonely.
Plainly because everyone is like visitors, I see thousands of people every day, and I don't know any of them, as I move around the city (I lived in 4 different places in the city over the years), I noticed that I never felt at home, it is like being a eternal stranger, a eternal visitor.
When I lived in a 100k people town, I remember that I could realiably find the same people in the same places, for example I could go eat a hot dog at night in a park, and talk with the regular, build friendships, and so on. And yet, it was still strange...
But São Paulo? Well, I could take the same route every single day, and don't see the same people twice. It is just horrible.
I only don't feel depressingly lonely, because I made friendship with some people over internet, and every month we all meet on someone house.
Plainly because everyone is like visitors, I see thousands of people every day, and I don't know any of them, as I move around the city (I lived in 4 different places in the city over the years), I noticed that I never felt at home, it is like being a eternal stranger, a eternal visitor.
When I lived in a 100k people town, I remember that I could realiably find the same people in the same places, for example I could go eat a hot dog at night in a park, and talk with the regular, build friendships, and so on. And yet, it was still strange...
But São Paulo? Well, I could take the same route every single day, and don't see the same people twice. It is just horrible.
I only don't feel depressingly lonely, because I made friendship with some people over internet, and every month we all meet on someone house.
> "Well, I could take the same route every single day, and don't see the same people twice. It is just horrible."
Have you tried to see them twice? Have you asked?
Having lived in quite a few large metros in my life, and now living in NYC, I have to say: the city is as impersonal and isolating as you let it be.
My challenge to you: forget every preconceived notion you have about strangers, how you're supposed to behave in public, and the how and the whys of friendship and hanging out - and go talk to some strangers.
You'll get some weird looks, but your success rate will be 1-2 orders of magnitude higher than what you'd expect.
I've seen this stance expressed on HN before and receive some flak - but I say fuck the naysayers. They can have solitude if they wish, but there is no crime in asking a stranger to shoot the shit over coffee, and anyone whose day would be ruined by such a request is oversensitive and paranoid to the point of absurdism.
Have you tried to see them twice? Have you asked?
Having lived in quite a few large metros in my life, and now living in NYC, I have to say: the city is as impersonal and isolating as you let it be.
My challenge to you: forget every preconceived notion you have about strangers, how you're supposed to behave in public, and the how and the whys of friendship and hanging out - and go talk to some strangers.
You'll get some weird looks, but your success rate will be 1-2 orders of magnitude higher than what you'd expect.
I've seen this stance expressed on HN before and receive some flak - but I say fuck the naysayers. They can have solitude if they wish, but there is no crime in asking a stranger to shoot the shit over coffee, and anyone whose day would be ruined by such a request is oversensitive and paranoid to the point of absurdism.
I used to live in São Paulo (now in SF) and I know a lot of software developers there. Hit me up via the email in my profile if you want any introductions.
My biggest gripe with SP insofar as loneliness is concerned is that although there are tons of people to meet and be friends with, the shitty logistics of moving around the city made it very unlikely that I would actually get out of the house and visit my friends. In SF I can get to the house of practically any friend in 10-45 minutes. In SP, it often took more than double that to meet my friends. When you can bank on spending ~40 minutes each way to visit a friend, you start going out a lot less.
My biggest gripe with SP insofar as loneliness is concerned is that although there are tons of people to meet and be friends with, the shitty logistics of moving around the city made it very unlikely that I would actually get out of the house and visit my friends. In SF I can get to the house of practically any friend in 10-45 minutes. In SP, it often took more than double that to meet my friends. When you can bank on spending ~40 minutes each way to visit a friend, you start going out a lot less.
Doesn't this happen to many professionals in NYC or elsewhere?
My impression is that Bloomberg has consciously chosen the strategy of encouraging second home ownership in Manhattan as an attempt to decouple New Yorks service and consumer economy from the financial services sector.
This trades off the progressive goals like affordable housing against providing a baseline of consumption activity to sustain NYC's tax base and its service workers.
This trades off the progressive goals like affordable housing against providing a baseline of consumption activity to sustain NYC's tax base and its service workers.
Do people not spending much time in NYC actually contribute much beyond property tax?
An apartment in a condo in NYC will be about $100k+ per year in fees and taxes. Dozens of people will be employed in the management and maintenance of the building.
I've also got the impression that consumption of various luxury goods and services in NY is highly coupled to bonus season in the financial sector. Millionaires from Kansas etc are likely to consume such services like Broadway, Bergdorfs etc year around because there are a lack of equivalent services back home.
I've also got the impression that consumption of various luxury goods and services in NY is highly coupled to bonus season in the financial sector. Millionaires from Kansas etc are likely to consume such services like Broadway, Bergdorfs etc year around because there are a lack of equivalent services back home.
>An apartment in a condo in NYC will be about $100k+ per year in fees and taxes.
[citation needed] Property tax in NYC is pretty low; this $3.35m condo in Tribeca is just over $20k/year in taxes and maintenance: http://streeteasy.com/nyc/sale/809162-condo-22-warren-street...
[citation needed] Property tax in NYC is pretty low; this $3.35m condo in Tribeca is just over $20k/year in taxes and maintenance: http://streeteasy.com/nyc/sale/809162-condo-22-warren-street...
[deleted]
One thing to note about the buildings in the article, is that they're all in fancy areas for shopping and tourists but not really places that long time residents want to live.
I would be more interested in knowing the stats for luxury housing across the whole city.
I would be more interested in knowing the stats for luxury housing across the whole city.
What're you talking about? The examples are: Columbus Circle, 157 W. 57th street, 65th and lex. The last one is in the heart of the UES old money residential area, and the former two are right where the fancy central park view housing happens to be. You know those rich kids whose parents are paying for their apartment in Williamsburg? Those are the places where those parents live.
Given NYC's sky-high rent, I wonder what would happen to the real estate market if these apartments were occupied by full-time residents. It seems grossly inefficient to have an apartment sitting empty for that long, no matter how much money you have. I guess there aren't too many good options, since airbnb-style renting is probably a) illegal and b) frowned upon by the building. If I were these people, I'd just treat the apartment as an investment property and stay in a really nice hotel when I was in town.
If you really where those people, it would be too much of a burden and hassle to have to deal with it as an investment property. They just don't want to deal with booking hotel rooms, the hassles. They can store whatever and know that it will remain untouched, they can fly into town and have an affair and leave, and best of all, it's prime real estate that figure will stay in high demand for the foreseeable future.
That was my take-away as well. In addition to having a relatively stable investment (prime real estate in a popular city should hold value very well), you get to avoid the hassle of booking travel, and can manage your expectations about what you're getting. It's a more exclusive and more-personal place to visit or rest than a hotel, since it can have YOUR art, YOUR bathrobe, etc.
The article says some of these people are doing it as a secure way to store money. Maybe not a classical investment, but not far off.
"Waiting at a red light, I look up at the large glass windows that are the eyes of Park Avenue. From a population-density point of view, this is the Midwest of Manhattan. Towering above me are rooms - rooms and rooms and rooms. And they are empty. There are powder rooms and dressing rooms and piano rooms and guest rooms and, somewhere above me, but I won't say where, a rabbit named Arthur has sixteen feet square all to himself."
-The Nanny Diaries: A Novel by Emma Mclaughlin, Nicola Kraus
-The Nanny Diaries: A Novel by Emma Mclaughlin, Nicola Kraus
I feel a little the same in SF. Maybe not at the same ratio, but still. Quite a few places are rented, but the people are rarely there. I always imagine they're just all very rich and have those places instead of hotels when they move from city to city. But really, i've no idea.
Note they all seems to own the place, ie it's not a rent.
Note they all seems to own the place, ie it's not a rent.
Seems like it’s clearly money left on the table. Perhaps someone is rich enough that they don’t care, but that seems odd.
Residences have something of a P/E ratio: market rent vs cost of the property. Perhaps the foregone rents are a drop in the ocean, but I don’t think so.
If it’s a question of luxury – the desire to have one’s own place even if it lies fallow – well, someone would have to be very idle rich to allow that to happen. Certainly there are high-end brokers who could host parties, or special visitors, in such places.
Residences have something of a P/E ratio: market rent vs cost of the property. Perhaps the foregone rents are a drop in the ocean, but I don’t think so.
If it’s a question of luxury – the desire to have one’s own place even if it lies fallow – well, someone would have to be very idle rich to allow that to happen. Certainly there are high-end brokers who could host parties, or special visitors, in such places.
Are there occupancy rules for insurance in the USA? I know there are in Canada and UK
"Not living full-time in your home can invalidate your insurance"
http://www.bbc.co.uk/news/business-19422609
"Not living full-time in your home can invalidate your insurance"
http://www.bbc.co.uk/news/business-19422609
Anything that isn't a primary residence should be heavily taxed. There should be an onerous carrying cost associated with real estate in markets with limited available real estate.
“It is a safe haven,”
and that's it, especially with Chinese, Russian or ME oil money. If you have $1++ bilion, you want to safely put away enough to live comfortably for the rest of your life, should government act up and taketh it. Maybe you are on a foreign trip, or you make it to the border, fake a passport or whatever, and then your property in NY or London awaits you. No need to work as a busboy or at a dry cleaning service.
In US, rich people may buy land, bunkers, gold and silver coins. But USA is much more stable and property rights are relatively safe so we call them paranoid.
and that's it, especially with Chinese, Russian or ME oil money. If you have $1++ bilion, you want to safely put away enough to live comfortably for the rest of your life, should government act up and taketh it. Maybe you are on a foreign trip, or you make it to the border, fake a passport or whatever, and then your property in NY or London awaits you. No need to work as a busboy or at a dry cleaning service.
In US, rich people may buy land, bunkers, gold and silver coins. But USA is much more stable and property rights are relatively safe so we call them paranoid.
What side effect is that I would posit that coop owner-occupancy rates are much, much higher.
Coop boards tend to have heavy restrictions on subletting too, which admittedly is more of an issue to lower income earners than the megawealthy (that seem to be the "culprits" for vacant luxury condos).
Personally I'd find it eerie living in a large apartment tower and never seeing any other residents. Lonely is right.