A snapshot of luxury condominiums and their ownership and occupancy trends offers a preliminary peek at the challenges posed by Seattle’s luxury boom.
I’ve traveled in a lot of major US cities in the last year outside of my hometown of Boston, Mass. Most of them are experiencing gentrification as wealthy newcomers drive up the cost of housing and displace long-time residents.
But there’s an additional disruptive force — a sort of globally supercharged gentrification resulting from billions of dollars in global wealth flowing into residential real estate. Across these cities, new residential luxury towers are rising up like weeds.
Last month, I wrote an op-ed in the Sunday Boston Globe that has triggered some great conversations. The piece, called “Time to Tax the Swanktuaries,” describes One Dalton Place — a building under construction that I see on my daily walk. The article led to an interview on WBUR’s Radio Boston and a recent conversation on Boston Neighborhood Network with Chris Lovett.
Check out the marketing video for One Dalton Place and their focus on providing international clientele a “service rich environment.”
As I write in the Globe:
“The bottom 24 floors of One Dalton will be a 215-room Four Seasons hotel. Rising from the 25th floor will be 160 luxury condominiums, with an average cost per unit of $6 million. The penthouse will go on the market for a Boston record-breaking $40 million.
“The future inhabitants of One Dalton will, Boston Magazine gushes, “enjoy a slew of ultra-luxe building amenities, too. The golf simulation room may come in handy on rainy days, not to mention the private theater, salon, health club, and spa.”
“One Dalton is only the latest “swanktuary” constructed over the last decade. It joins Millennium Place and Millennium Tower, the two Ritz Carlton residences on Avery Street, and Twenty-Two Liberty place, together adding over 1,100 units of housing for the global 1 percent.These buildings offer unprecedented luxury and we would be smart to tax them as such, with a high-end real estate transfer tax that could be used to help Boston deal with the economic inequality that’s made their construction possible in the first place.”
These buildings are not homes, but wealth storage units. And such elegant piggy banks are being constructed across the planet –in major US cities and global wealth hubs like London, Hong Kong, Dubai, and Singapore.
They’re part of a global hidden wealth infrastructure, a mechanism to hide wealth and mask ownership to avoid taxation, legalities, and oversight.
A high percentage of these housing units will sit empty or rarely occupied. In the Millennium Tower, for example, only 25 percent of units claim Boston’s residential property exemption, declaring the property their principal residence.
A glance at the Boston Assessor’s report for Millennium Tower reveals an ample number of global surnames and shell corporations masking the actual owners — perhaps absentee investors from Wall Street, Russia, or China. The property-owning entity may be incorporated in Bermuda, controlled by a trust registered in Panama, and funded from a Cayman Islands bank account.
But the fixed asset is now in your downtown or residential neighborhood.
Projects like these don’t just drive up land and housing costs, fueling the displacement of less wealthy inhabitants. They also suck up vast amounts of actual fuel.
I also write that we should tax high-end real estate transfers and vacant homes and apartments and direct funds to permanent affordable housing.
In 2016, San Francisco voters approved a high-end real estate transfer tax on residential and commercial properties sold for over $5 million. It’s expected to generate $44 million a year, which will fund free community college tuition for city residents.
In New York City, Mayor Bill DeBlasio has proposed a “mansion tax” on properties over $2.5 million.
We should move in tandem with other coastal coast cities to enact similar legislation, forming compacts to defend our communities from rapacious global capital.
We should take a cue from Vancouver, which has increased taxes on unoccupied properties, and from British Columbia, which has just levied a tax on absentee owners in response to non-resident Chinese investors treating Vancouver-area real estate as offshore piggy banks.
Boston should harvest these taxes and direct them to our linkage fund, with the goal of expanding the stock of permanently affordable housing — in the form of public housing, nonprofit-owned rental housing, limited equity cooperatives, and homeownership on community land trusts.
Boston is for everyone who lives here, including new neighbors from around the world. But the priority for city policy should be protecting the non-wealthy majority. We should capture a portion of this global wealth and deploy it to protect the city we love.