What slays me about this is that if those developers had invested in affordable (1000 USD or less per month) housing they’d be racking in 16,242,000 USD per month guaranteed. Greed is not good. Try thinking long term rich folks. Actually that amount would be doubled or possibly tripled seeing how moderate income people do not need a living room bigger than the house or hospital ward they were born in.
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It would be interesting to know how ‘sticky’ the pricing features(both architectural: size, built in amenities, being expensive to heat/cool in a swish looking way; and legal: zoning restrictions on density, ownership arrangements that make chopping them up difficult, etc.) of these things are.
If you’d basically have to gut the building, or even take it down, to substantially alter the density that both makes them less useful even if the developers do cave and makes a longer period of optimistic holding out more likely.
If they are much closer to the essentially transient internal structure of build-to-suit commercial properties where walls are expected to be shoved around pretty much every time a lease changes, just with fancier veneer, they are potentially much more useful.
I suspect that the answer is “everyone” and “but remember that the market can remain irrational longer than you can remain solvent.”
The Dow 30,000 type true believers are unlikely to be the majority; but I suspect that people heavily involved in arbitrage who think that they can definitely stay ahead of the greater fool and be 9ut before the bubble bursts are a lot more common(and the most visible ones are the ones who have been correct often enough to become quite wealthy, which leads to unhelpful survivor bias.)
When we were looking for apartments to buy in Manhattan and Brooklyn three years ago - the vast majority of building going on was ultra-luxury - prices in the $3 million plus range. The few “affordable” apartments priced at $700-900k for 1-2 bedrooms were sold in hours or days at over asking price. It’s easier and more profitable for developers to build with zero regard to budget and then sell 3 or 4 units than to manage costs and handle the sale of 20 units.
In the end we decided to opt out of the game as I work from home and can be located anywhere. It was better for my partner to give up her job and for both of us to move to a small town in the country than both of us slave to a 3/4 million dollar mortgage. Our physical and mental health has improved substantially as well
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There might be a little bit of mileage in subdividing some of them, but I don’t think there’s any real prospect that you could just seize empty luxury buildings and then inject them into the opposite end of the housing market where the need is greatest. They’re generally in the wrong locations, and not spacious in proportion to their cost (i.e. a super-luxury apartment is probably only twice as big as apartments that it costs 50 times as much as). Structurally, they’re prone to things like high ceilings (i.e. not enough floors) and limited or no circulation between dwellings on each floor (if there are private elevators) so that you’d lose floor space before you even started subdividing them.
Even to the extent they can be subdivided, the only way these properties could relieve pressure on the housing supply is by driving down prices across the board – if they were all sold tomorrow at 90% off, that would open up affordable housing, but it’d wipe out the value of millions of middle-class homes in the process.
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That’s the side effect that one would prefer to skip(the middle class certainly has it better than the abjectly poor; but you’d crater a vast number of retirements and the social effects of a substantial portion of mortgages being firmly underwater would definitely be unpleasant); but it seems like there is a fairly fundamental tension between the “your house is a wealtg-building asset that appreciates forever!” and housing affordability that has to be out to rest somehow.
Unless we want an arrangement where obtaining property is a basically feudal business, handled by inheritance or serfdom, the dreams of continuous nest egg growth through home ownership have to die, since they imply a continuously rising cost of non-homelessness for everyone else(along with a voting Bloc intensely focused on mortgage tax deductions and exclusionary zoning, property tax value reassessment grandfathering, and similar strategies that openly benefit incumbent householders and rentiers).
The question is just how to kill it off with as little trauma to the current crop of people who bought the narrative(and the house) and ideally won’t need to be rendered destitute; but who are representatives of a pattern that must not be repeated.
In that sense the comparatively low end of real estate speculation is trickier to deal with. As a matter of political will, or winning a lobbyist battle, going up against the high end of the market might well be much harder; but the fortunes threatened there are ones that can take the damage; so in principle it’s hard to get teary about deflating it good and hard. The low end is also an invidious bubble; but dealing with it without giving real people losses that meaningfully impact their quality of life is tricky…
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Well, it would be sustainable if we’d just de-regulate money laundering.
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