Consumed By People Who Are Not Here
A report from Next City on Massachusetts. “A large percentage of Boston’s luxury condos are going to LLCs and trusts rather than owner-occupants according to a new study, which claims that the city’s high-end building boom isn’t doing much to address the local housing shortage. Researchers from the Institute for Policy Studies (IPS) examined property records for roughly 1,800 condos in 12 newer luxury buildings throughout the city, the Boston Globe reports. The condos generally sell for over $3 million apiece.”
“They found that over 35 percent of the units were owned by LLCs or trusts that obscured the real owners and beneficiaries. What’s more, 64 percent of the owners didn’t claim the residential exemption offered by the city, which may indicate that Boston isn’t their primary residence.”
“‘I wouldn’t even call these buildings a housing market,’ study author Chuck Collins recently told the Globe. ‘It’s just another asset class for a segment of investors looking for an alternative to the stock market. It’s not a home. It’s a wealth-storage unit.’”
From Curbed Boston. “In some buildings, the shares of LLCs and those units not claiming the residential exemption are particularly high, according to the study. For instance, 56 percent of the 51 units in the Mandarin Oriental at the Prudential Center ‘are owned by trusts, LLCs, and shell corporations, and fewer than 18 percent claim a residential exemption.’ At Downtown Crossing’s Millennium Tower, 35 percent of its 443 units ‘are owned by shell corporations and trusts, and almost 80 percent of the units do not claim the residential exemption.’”
From WBUR News. “Opponents of Boston’s luxury housing boom are warning of another prospective danger beyond raising rents and forcing out longtime residents — tax evasion and money laundering under the cover of the multimillion-dollar condos sprouting through the sky. The reports co-author, Boston-based Chuck Collins, says the shell game could be providing cover to crimes like tax evasion — and warns the city should be vigilant.”
“‘When you see a Delaware LLC buying a $6 million condo with cash and you can’t trace the owner, then you have to ask: ‘Why is this property being purchased? Is it money laundering?’ Collins said.”
“‘We spot-checked some of those buildings and found there were large numbers of cash purchases by shell corporations, which is sort of a red flag for possible use of illicit funds,’ Collins said. ‘They have very high percentage of non-resident ownership, they have a very high percentage of shell corporations. … If we were in Miami or New York those are the buildings that the Treasury Department crime division would be investigating.’”
“The study points out that Boston is not among the cities monitored for illicit real estate dealings by the Financial Crimes Enforcement Network, or FinCEN, a Treasury Department program designed to combat money laundering.”
“For City Councilor Lydia Edwards, however, more needs to be done for middle-class and low-income housing, especially in light of the new report. ‘Boston is being consumed by people who are not here,’ Edwards said. ‘That’s I think where there’s a disconnect, where we are building really more pieces of stock then we are actually housing.’”
“Sam Tyler, president of the Boston Metropolitan Research Bureau, says Boston depends heavily on the tax revenue that comes from new development. And the luxury housing market, with many of the developments cited in the report permitted under Mayor Tom Menino, is not something the city is in a position to change.”
“The city ‘is not necessarily encouraging luxury condominiums and the construction of those, it’s just that that’s the kind of housing that can be built downtown,’ said Tyler.”
From WGBH News. “WGBH All Things Considered anchor Barbara Howard: Boston, as we all know, is undergoing a real housing crisis in terms of the average homeowner looking to buy. These are luxury properties, so how would that impact your average Joe looking for a house?”
“Chuck Collins - lead author of the report: Here’s what I would say: if you look at what’s happening right now, we have a luxury real estate boom, and we have thousands of more luxury units coming. They’ve been approved in the Seaport and in the Fenway and the Back Bay. Ten years from now, we’re going to look back and say the city, the skyline, and the demographics of the city have been fundamentally altered.”
‘If we were in Miami or New York those are the buildings that the Treasury Department crime division would be investigating’
When examining mania’s, one has to remember you are dealing with a public that generally thinks this is normal. Sure money laundering is bad, but what if there weren’t one single instance? Isn’t this situation still nuts?
Entire sections of the most valuable land in metros, built as what, paintings on a wall? This is glaring irrational behavior.
This can’t happen and must be fake news. Senator Running Deer wont allow this. Nice try!
Boston media are a weird bunch. The safe deposit box in the sky thing died years ago. Yet here they are saying “what what what WHAT!”
Yeah, did you not happen to look up at those towers all these years Boston? Didn’t notice they were dark at night until some think tank points it out? Even the NYT reported about that in Manhattan long ago.
‘Sam Tyler, president of the Boston Metropolitan Research Bureau, says Boston depends heavily on the tax revenue that comes from new development’
Irrelevant.
‘The city ‘is not necessarily encouraging luxury condominiums and the construction of those, it’s just that that’s the kind of housing that can be built downtown’
This gets to the crux of the matter: the only kind of housing that can be built is the kind no one can afford but people who live elsewhere. That is crazy talk. And these “investors” need only glance at London, Manhattan and Miami Beach to see what’s coming.
Seatac, WA Housing Prices Crater 16% YOY As Seattle Area Unemployment Rate Escalates
https://www.movoto.com/seatac-wa/market-trends/
‘The IPS also used the study to point out large, growing disparity in Boston’s demographic makeup according to class and race. According to the study, Boston’s Suffolk County ranks as “the most unequal” in Massachusetts — in other words, it displays the biggest gap between the wealthiest 1 percent and the rest of the population. The state itself is ranked as the sixth-most unequal in the nation.’
“One marker of those trends: In 2015, not one single home mortgage loan was issued for African-American and Latino families in the Seaport District and the Fenway, two Boston neighborhoods with thousands of new luxury housing units,” the IPS report said.’
‘To rectify the situation, the IPS proposed a number of solutions, including a new tax on real estate transactions valued at over $2.5 million that would directly fund affordable housing initiatives throughout Boston. A tax on largely vacant property could provide additional funding while discouraging real estate investment. The IPS also encouraged local officials to comply with regulations already in place in cities like Miami, where federal agencies require corporate real estate buyers to reveal their true identity. However, it is unclear whether these policies could garner sufficient support to be taken up by local or state lawmakers.’
If every single money launder was eliminated it wouldn’t change this:
‘not one single home mortgage loan was issued for African-American and Latino families in the Seaport District and the Fenway’
It’s starting to look like the media focus on money laundering is to obscure the insanity of the whole debacle. This has already played out in the other cities I’ve mentioned and those people got their asses kicked with more coming every day.
“fund affordable housing initiatives”
How about getting rid of the GSEs and returning to 1995-ish lending standards? Can we start there or is it all about, “but muh financial innovation”?
“media focus on money laundering”
This allows them to claim victory on their reports of this being a market returning to normal. ie -”Well, if it wasn’t for money laundering things we be settling into a normal market.” Just a bit longer until they can no longer hide behind it.
I was watching a documentary on North Korean.
Very pro NK.
A line from a NK official. Everyone is entitled to housing. However, you are no entitled to choose to where the housing is located.
https://www.cnbc.com/2018/09/11/century-21-ceo-housing-market-is-in-a-perfect-storm-for-demand.html
https://www.cnbc.com/2018/09/12/cfpb-acting-director-mick-mulvaney-worries-about-student-loan-debt.html
LOL
wow
1. the century 21 CEO. Can we hold him accountable for this stupidity
2. Can we hold CNBC accountable? How can they not refer to their Indian sibling
From a previous blog posting
https://www.cnbctv18.com/views/the-origins-of-indias-current-housing-glut-began-with-the-9-11-attacks-773481.htm
My comments and responses on this from the previous posting
.
Comment by b
2018-09-11 17:12:06
why the heck can CNBC India TV 18 provide a 5x better, concise explanation than CNBC US?
Reply to this comment
Comment by Boo Randy
2018-09-11 17:29:45
Why the heck do citizen bloggers provide far more timely and relevant assessments of current events or economic matters than the Real Journalists of the corporate media? Could it be that the latter are employed to influence rather than inform?
Reply to this comment
Comment by Aaron Layman Properties
2018-09-12 06:10:24
Excellent point, something I addressed in one of my latest posts, and why I remain an independent broker. The establishment has (as always) a narrative to sell. They don’t want inconvenient things like facts getting in the way of sales and profits.
As Upton Sinclair said “It’s difficult to get a man to understand something, when his salary depends upon his not understanding it.”
Many people are just beginning to realize the blunders of quantitative easing, but there will undoubtedly be a bountiful harvest of consequences from these abysmal trickle-down policy failures designed to enrich the wealthy and well-connected.
https://aaronlayman.com/2018/09/denton-county-home-sales-slide-7-in-august/
“A crash in the housing market can cause a bigger emotional trauma than any stock market crash as most homebuyers are leveraged. So in 2008 when the housing market crashed in the US, its government was quick to realise the impending public distress. It pumped in money and saved the day.”
I think the runway foam for the banks theory is better.
Sure…they didn’t say WHO they “saved the day” for. They just let everyone assume it was “homebuyers”.
The CEO says there is demand, so it must be true! Also Tim Cook said this was the best iPhone yet today, so it MUST be true. Seriously, what do you think these CEOs were going to say? “Nah, demand stinks because no one can afford these houses”!
“Suzanne researched this”?
Dracut, MA Housing Prices Crater 11% YOY As False Reporting By Media Misleads Public
https://www.movoto.com/dracut-ma/market-trends/
Im thinking about leaving my fortune to a fund to help bitter renters with down payments on shacks.
Realtors are liars.
“It’s not a home. It’s a wealth-storage unit.”
Chorus:
Oh but ain’t that America for you and me
Ain’t that America somethin’ to see baby
Ain’t that America home of the free
Little pink wealth-storage units for you and me
https://www.youtube.com/watch?v=qOfkpu6749w
Can you make a down-payment for me without dying?
Why not borrow against next February’s tax refund?
North Boston, MA Housing Prices Crater 11% YOY As Number Of Underwater Mortgages Surge Nationally
https://www.zillow.com/north-end-boston-ma/home-values/
*Select price from dropdown menu on first chart
Is there a way to short granite counter tops, stainless steel appliances, European sports cars, vacations to Europe and boob jobs for the wife?
*******
What Will These Mortgage Rates Do to Homeowners Trying to Refinance, Homebuyers, and Mortgage Lenders?
by Wolf Richter • Sep 12, 2018
Mortgage rates – which move roughly in parallel with the 10-year Treasury yield – surged in two big bouts in this rate-hike cycle: First, from the near-historic low in July 2016 to March 2017; and after backtracking some, from September 2017 to mid-May 2018, when MBA’s measure of the average 30-year fixed rate hit 4.86%. Since then mortgage rates have vacillated in the same range – the highest since May 2011 (chart via Investing.com; red marks added).
For mortgage lenders, refinancing existing mortgages is a big and profitable part of their business. In the reporting week, the share of refinance activity versus all mortgage originations fell to a very low level, but that share was still 37.8% of all mortgage originations.
The MBA reported today that its Refinance Index, which covers applications to refinance existing mortgages, fell this week to the lowest level since December 2000. At 884, the index has plunged about 65% from the prevailing range in early to mid-2016
oh poor banana ….
don’t you know that granite is out and quartz countertops are in? Actually i didnt until my sister-in-law mentioned.
I am so out of touch
Q; What happens when SJW Hollywood Utopian “feel good” mindsets hit reality?
*****
Brad Pitt built dozens of homes in New Orleans after Katrina…falling apart and residents suing.
https://www.nbcnews.com | September 12, 2018 | Brandy Zadrozny, Kit Ramgopal and Farnoush Amiri
Billed as flood-safe and futuristic, the Make It Right homes towered over vacant lots in pops of teal, lemon and lavender. Houses like that just didn’t exist in the working-class, mostly black section of New Orleans that Allen’s family had called home for four generations — and definitely not for $130,000.
“I called it my Mardi Gras float,” Allen says of 1826 Reynes Street, the roof deck-topped home that now sits abandoned — mushrooms growing from its split siding, wooden boards propping up its sagging roof. Allen bought the house in 2011 from the Make It Right Foundation, a charity formed by Brad Pitt to help Lower 9th Ward residents return home after the hurricane.
But Allen and 11 other residents who spoke to NBC News, 10 of them on the record, say that many of the Make It Right homes are rotting and dangerous. They complain of mold and collapsing structures, electrical fires and gas leaks. They say the houses were built too quickly, with low-quality materials, and that the designs didn’t take into account New Orleans’ humid, rainy climate.
As the problems worsened, the organization has all but disappeared. Make It Right hasn’t built a home, filed tax forms or updated its website since 2015. The downtown New Orleans office has been closed, the staff has been cut to a handful and residents say their calls go unreturned. While Pitt ordered inspections for the homes in 2016, according to a spokesperson, residents say they’re still waiting for the results and for much-needed repairs.
Allen, 35, moved into her gray, two-story Make It Right house on stilts in October 2011. Within weeks, she said she noticed cream-colored mushrooms popping up from her bedroom walls and kitchen outlets. Photos from that winter show mold creeping on her carpets and the mushrooms protruding from wood rotting under the siding. By 2012, Allen, who works from home as a health insurance administrator, said she began having headaches and felt tired all the time, symptoms reflected in a doctor’s note from August 2012.
“The problem is that they’re stringing people along because they’re making promises that they’ll fix things, and they never do,” Austin said before the lawsuit was filed. “Folks are getting sicker and houses are breaking down every day.”
“There was no way I was going to buy a flat-roofed house,” said Sean LeBeouf, a police officer who lives with his wife in a Make It Right house, which has a slanted roof. “In Louisiana, that’s just ridiculous. Look around, and there are no flat-roofed houses because of how much rain we get.”
I hadn’t heard about that. Thx for posting.
“she said she noticed cream-colored mushrooms popping up from her bedroom walls and kitchen outlets.”
Shrooms?
Chelsea property takes a dive
Financial Times-17 hours ago
In Chelsea, west London, the trade in property has stalled dramatically. … Properties valued at less than £1m have seen the bigger slump in trade, down 54 per …
If you understand property taxes vacant or seasonal use property =nirvana
Less kids in schools
Moorpark, CA Housing Prices Crater 9% YOY As Plunging China GDP Ravages Southern California
https://www.movoto.com/moorpark-ca/market-trends/
Great! Here’s the plan.
Step 1: Let them build until they stop!
Step 2: Tax the tell out of them!
Step 3: Cheer the price drops all the way down, and encourage (but do not offer to subsidize) conversion to rentals!
Result — subsidized middle income housing with not one taxpayer dollar!
Worked for downtown Miami in the 2000s.
Now import millions of low skill immigrants - both legal and illegal