The advent of the "non-primary" housing unit—an apartment or home purchased as an investment rather than a residence, often by a foreign buyer—is perhaps the most talked-about factor in the mix that created the era of the $5 million home. Both Yu and Gabriel pointed to significant foreign money coming into real estate in Los Angeles and along the Southern Coast, specifically in places like Orange County. Absentee owners' purchases have also been a contentious aspect of New York's luxury real estate market.For a lot of bad reasons I don't have the time for right now, it's becoming relatively less profitable for investors to send money after other fake money in the stock market than it is to pull money out and park it somewhere. One of the places people like to hide money is in luxury real estate.
For the global top one or five percent, investing in another home is fairly wise, explained Pendall. Right now, it's hard to make money on your money. Likewise, he told me by phone, Baby Boomers earning $1,000,000 or more a year might find holding another home in any of these cities a good use of funds as their children become self sufficient and their expenses decrease. "They have the investment value in mind."
It's a good sign that the feds are starting to look at the impact of dark money on the housing markets of "destination cities" like New York and Miami. It would be nice to see that investigation expand into New Orleans where theland rush has also been heavy in cash transactions.... particularly in the market for "second homes."Concerned about illicit money flowing into luxury real estate, the Treasury Department said Wednesday that it would begin identifying and tracking secret buyers of high-end properties.The initiative will start in two of the nation’s major destinations for global wealth: Manhattan and Miami-Dade County. It will shine a light on the darkest corner of the real estate market: all-cash purchases made by shell companies that often shield purchasers’ identities.It is the first time the federal government has required real estate companies to disclose names behind cash transactions, and it is likely to send shudders through the real estate industry, which has benefited enormously in recent years from a building boom increasingly dependent on wealthy, secretive buyers.The initiative is part of a broader federal effort to increase the focus on money laundering in real estate. Treasury and federal law enforcement officials said they were putting greater resources into investigating luxury real estate sales that involve shell companies like limited liability companies, often known as L.L.C.s; partnerships; and other entities.
Another growing trend: Wealthy families buying condos, especially larger two-bedroom units, as a place to spend a few months out of the year and invite friends along.In the meantime, though, the city, in fact, may be looking for ways to take advantage of all this parked money and vacuum as much tax revenue out of it as they can. Which is why City Council is going to approve the short term rental legalization next month. There's a lot of money parked in New Orleans real estate right now. Council doesn't really care if it's driving working people out of their homes. All they want is a taste.
Prices are up. Bouler said. For example, a condo purchased for $175,000 in 2005 just sold last week for $283,000. Most of the demand is focused on a price range of $300,000 to $500,000, he said.
As interest in French Quarter listings has increased, driving prices up, the demand has rippled out into all part of the city, he said.
He has also noticed condo owners are less likely to give them up. A doctor who finished medical school and moved away, for example, is opting to rent his condo rather than sell, Bouler said.