Tuesday, January 13, 2015

The real estate spending curve

When I was working as a business reporter, I used to joke that (because of high costs) most people did not own their homes on Maui, but that (because of the ohana provision) everybody who did own a house owned two houses.

It was a somewhat bitter joke. The ohana law did not work out as intended, and you could argue it two ways: It encouraged middling-income Mauians who would not otherwise have become real estate developers to provide a large number of (for Maui) relatively accessible rentals, automatically mixing income classes so that we did not end up with segregation-by-bank account; or that it shifted tax and zoning advantages to the haves so that they could fatten their bank accounts on the have-nots, at the same time making it nearly impossible for ordinary working people with more than 2 children to find adequate housing.

One thing for sure, the ohana law did generate housing, which is more than you can say for the employee housing ordinance or the various iterations of the housing and finance authority.

And Maui does not have anything like the tent cities of Waianae or Thomas Square.

I bring this up because of a New York Times story about unoccupied real estate in New York City, and especially Manhattan, where the world's timorous capitalists are salting away multimillion-dollar boltholes against the time when their fellow countrymen decide to get rid of their kleptocrats.

(Other reports have stated that some districts in Europe -- one many Americans will have heard of is Mayfair -- are virtually empty, with all the apartments awaiting their Russian and Nigerian owners to come and hide out. This is not an entirely new phenomenon. During the London Blitz, George Orwell noted that although tens and hundreds of thousands of working class people had been bombed out in the East End [where the Luftwaffe targeted the Docklands] the mansions of the West End stood empty, their plutocratic owners either in the service or hiding out at their Downton Abbeys, but refusing to allow dirty Cockneys to sleep in them. England being England in those presocialist days, the Cockneys were required to sleep "rough," as the English say.)

Nut graf:

As for the data that has been uncovered, “it reflects the increasing level of income inequality in the city, that you can buy a relatively expensive condo and not have to occupy it all the time,” Mr. Beveridge said. “Housing has a strange spending curve. If you are poor, you spend a high proportion of your money on housing. Then as you get up into the middle class, people pay off their mortgages and you don’t see as much spending on housing. Then as you get really wealthy, the rich spend a lot on housing, but they do it by having a lot of homes.”

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