Thursday, January 23, 2020

Who owns real estate now?

Below are some articles with quoted selections I am currently reading that discuss ownership of real estate in urban centers in America and across the globe. I am thinking about these issues:

(1) How does the 'ghost ownership' and/or large scale 'corporate ownership' of housing effect our economy and social infrastructure?
(2) How does housing ownership as an 'asset class' effect pricing and supply?
(3) At one point does an 'over supply' of 'socially mismatched' housing types increase risk of a recession in the building industry?
(4) How do 'ghost ownership', 'over-pricing and speculation', mismatched market supply, rental and housing vacancy rates effect homelessness rates?
(5) Can we use Marxist economic theory to analyze the efficiency of the US housing market to make stronger cases for the use of:
  • vacancy taxes like those used in Washington, D.C. and Vancouver, BC.
  • more 'social justice' focused permit regulation and zoning
  • stronger local condemnation  and forfeiture laws in the case of "washing machine"  or laundered housing assets
  • what local actions can we use as citizens (e.g. more informed  and open ownership data, stronger condemnation laws, vacancy taxes, 'social justice' implementations of housing permits, etc.) to create a more fair and balanced housing market?
"America’s cities are being bought up, bit by bit, by anonymous shell companies using piles of cash. Modest single-family homes, owned for generations by families, now are held by corporate vehicles with names that appear to be little more than jumbles of letters and punctuation – such as SC-TUSCA LLC, CNS1975 LLC – registered to law offices and post office boxes miles away. New glittering towers filled with owned but empty condos look down over our cities, as residents below struggle to find any available housing.

All-cash transactions have come to account for a quarter of all residential real estate purchases, “totaling hundreds of billions of dollars nationwide,” the Financial Crimes Enforcement Network – the financial crimes unit of the federal Treasury Department, also known as FinCEN – noted in a 2017 news release. Thanks to the Bank Secrecy Act, a 1970 anti-money-laundering law, the agency is able to learn who owns many of these properties. In high-cost cities such as New York, San Francisco, Los Angeles and Miami, it’s flagged over 30% of cash purchases as suspicious transactions. But FinCEN also cites this bill to hide this information from the public, leaving the American people increasingly in the dark about who owns their cities."
"In Manhattan, the homeless shelters are full, and the luxury skyscrapers are vacant. Such is the tale of two cities within America’s largest metro. Even as 80,000 people sleep in New York City’s shelters or on its streets, Manhattan residents have watched skinny condominium skyscrapers rise across the island. These colossal stalagmites initially transformed not only the city’s skyline but also the real-estate market for new homes. From 2011 to 2019, the average price of a newly listed condo in New York soared from $1.15 million to $3.77 million."
"Tons of New Apartments Are Being Built That Almost No One Can Afford
More new units will be built in 2020 than in any year since the ‘80s, a majority of them in cities with deep poverty and inequality crises."
RICHARDSON, Texas, (January 15, 2020) — After the U.S. apartment stock grew more than 2 million units during the past decade, the volume of annual completions will climb further as the 2020s begin, according to real estate technology and analytics firm RealPage, Inc. (NASDAQ:RP). Scheduled deliveries this year jump to 370,942 units, up 50 percent from the 2019 total of 246,779 units. :
"These homes are not just properties that are rented out to house families; they have been transformed into a new class of financial asset and investment vehicle. According to the NBER study, the homes have been capitalized into single-family rental bonds, which has grown into a $15 billion-plus market. Three Real Estate Investment Trusts (REITs) backed by single-family rental assets have had IPOs with a market capitalization of more than $18 billion."
"As Saskia Sassen has documented, the main players in this market are giant corporations and private equity firms—in 2015, corporations purchased $1 trillion in real estate in the world’s top 100 global cities. Sovereign banks from countries like China, which recently relaxed its foreign investment rules, as well as oil-rich countries looking to diversify their portfolios, like Norway and Qatar, are also notable players in the global real estate market. Laurence Fink, CEO of the private equity giant BlackRock, said apartments in cities like New York, London, and Vancouver have begun to replace gold as the primary store of wealth for the super-rich." :
"Does the massive foreign and national corporate buying of urban buildings and land that took off after the 2008 crisis signal an emergent new phase in major cities? From mid-2013 to mid-2014, corporate buying of existing properties exceeded $600bn (£395bn) in the top 100 recipient cities, and $1trillion a year later – and this figure includes only major acquisitions (eg. a minimum of $5m in the case of New York City)."

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