Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
As for the luxury brand argument, sure, that exists to some extent, but much of that is because the wealthy are also attracted to NYC itself due to everything else it offers and the fact that it's a major commercial center. 421A has lapsed and yet construction is still going strong and demand is still high, so that might be an indicator that tax bonuses for luxury housing isn't necessary.
This is not true, do not look at current construction. When it comes to 421a, there is a 3 year lag between permits filed for construction and buildings actually starting construction on the ground. Most (all?) current construction in NYC are 421a buildings. There has been a sharp decline in new construction permits issued, something like 50% decline after 421A expired.
Quote:
If you think the idea of a pied-a-terre tax itself is unfair and that just because someone can pay it doesn't mean they should, fine. At the very least, I think it's reasonable to say that the assessment system as it is is too easy to game. There is something wrong with an assessment system when a condo sold at $90 million dollars gets assessed for property tax akin to that for a property sold at $6 million. Now are grievous assessments issues like this as large a factor in London, Hong Kong, Vancouver, Sydney or Singapore (no clue on Dubai)? Not really, so why does this need to happen in NYC in particular to attract the wealthy? Is there an argument that NYC is a lesser city than London and Singapore so therefore must provide tax rebates, lower property tax rates, no pied-a-terre tax (or non-owner occupied or vacancy tax which is a pretty massive tax in Singapore), no foreign-buyers tax as well as questionable property value assessments for taxes?
I do agree it can be an overall good thing to have extremely wealthy property investors in NYC. However, they should at least be liable to pay property tax rates that are in line with the rates for other residences if not rates that are in line with those of some of the other highly marketable international cities. Perhaps do it cautiously then if you're worrying about investor panic?
This is all wrong. 421a applied to virtually all condominium contruction in the city for the past 45 years. It has nothing to do with luxury buildings. $45,000 apartments in 1980 in Queens and Brooklyn also qualified for 421a. $90 million dollar condo is not accessed like a $6 million condo, because $6 million condo pays about $600 a month in property tax. My parents have a $600K condo in NYC city limits, they pay 128 dollars a month in property taxes. Again, these property taxes are normal for NYC for condominium apartments. Single family homes also have very low tax assessments in NYC city limits, about half of the United States average. That is one of the advantages of owning property in NYC. It is a sound strategy where you shift the tax burden from the long term property owners/investors in the city to other people. (In the form of high sales tax, that way you collect taxes from all the tourists and suburban workers from LI and NJ). Letting 421a expire was a bad move by DeBlasio, all it did is raise property tax in the city that is already struggling with affordable housing, in a time when the city is running budget surpluses and doesn't need to raise taxes for additional revenue.
This is not true, do not look at current construction. When it comes to 421a, there is a 3 year lag between permits filed for construction and buildings actually starting construction on the ground. Most (all?) current construction in NYC are 421a buildings. There has been a sharp decline in new construction permits issued, something like 50% decline after 421A expired.
This is all wrong. 421a applied to virtually all condominium contruction in the city for the past 45 years. It has nothing to do with luxury buildings. $45,000 apartments in 1980 in Queens and Brooklyn also qualified for 421a. $90 million dollar condo is not accessed like a $6 million condo, because $6 million condo pays about $600 a month in property tax. My parents have a $600K condo in NYC city limits, they pay 128 dollars a month in property taxes. Again, these property taxes are normal for NYC for condominium apartments. Single family homes also have very low tax assessments in NYC city limits, about half of the United States average. That is one of the advantages of owning property in NYC. It is a sound strategy where you shift the tax burden from the long term property owners/investors in the city to other people. (In the form of high sales tax, that way you collect taxes from all the tourists and suburban workers from LI and NJ). Letting 421a expire was a bad move by DeBlasio, all it did is raise property tax in the city that is already struggling with affordable housing, in a time when the city is running budget surpluses and doesn't need to raise taxes for additional revenue
Assessment oddities is not the same as 421a--those are two different factors. I am not against 421a in principle. Your parent's property taxes are abated by 421a, but is there real estate assessed to be worth anywhere from a tenth to a hundredth of what it's worth at market rate?
The assessment is a different factor. Here is one of several articles on NYC's odd assessment system. Do you agree that 421a and the oddities of NYC's assessment system are two different things? If you set aside 421a from the issue, do you agree that there is something that needs to be changed about how ultra luxury property values are assessed for taxes in NYC? Do you see London and Singapore as having the same issue?
And there are plenty of underfunded programs within the city that can be expanded. Trash collection could be far better, municipal restrooms can be better, NYC's contribution to MTA can be expanded, etc. There's a reason why infrastructure and social services in a lot of NYC's peer cities are better in comparison.
Previously you mentioned peer cities for NYC. If you want to talk about comparable cities for this, then you must realize that property taxes aren't necessarily more favorable in those other cities and a bevy of other taxes such as foreign-owners taxes, vacancy taxes, etc. exist in many of these other cities. If you're against those other taxes in principle and think those were poor choices on those cities's parts, that's fine, but it makes sense to keep tabs on these other competing cities to see what they have done as an appropriate response and how well or poorly those policies work for them. However, that's still different from the assessment issues.
As for the dip after 421A, there was also a rush before its lapse where a record number of permits were issued. I'm not against 421a in principle. Kind of a moot point since it's probably coming back.
Uh, apologies to everyone else.
Gantz, do you want to take this to another forum or pm?
Last edited by OyCrumbler; 01-13-2017 at 01:52 PM..
Curbed is reporting that Chicago proper is slated to add 6,600 new apartments in 2017 in 33 different buildings. Apparently this number is higher than 2015 & 2016 combined. http://chicago.curbed.com/2017/2/8/1...m-chicago-2017
Metro Chicago was behind many other large metros for apartment delivery in 2016, but this should push the city further up the list.
^ one reason metro Chicago is behind so much is that the city itself is such a huge % of completions, while the suburbs with 70% of the population are really at a standstill regarding growth in jobs and population. For the metro as a whole the numbers are disappointing, but for the city itself and especially downtown they're somewhat unprecedented.
One of the reasons is the huge influx of headquarters and jobs into the downtown area from the suburbs. There have been dozens and dozens of headquarter and main office relocations to Chicago during the past few years, and a lot of those are from suburban areas.
Downtown hit its peak in 2008, then fell, but then really came charging back the past few years with all these relocations. It's THE main reason that downtown has dozens of highrises under construction and has added thousands of new residential units lately while the rest of the metro area outside of downtown (and the north and northwest areas of the city) have languished.
That's a really low apartment number for Chicago. Maybe it feels like more on the ground because they're mostly highrises in a small percentage of the city. Of course Chicago is always HUGE for jobs in the core.
Seattle had a Downtown workforce report today that focused on commute modes. It said jobs grew from 202,000 in 2010 to 247,000 in 2016, similar to the Chicago percentage. Of the added 45,000, over 31,000 net used transit, 9,000 was non-motorized, and about 2,300 each were rideshare or drive alone. This is omitting 6,500,000 sf of commercial or institutional office space under construction or with workers currently doing site prep, which would fit another 26,000 to 30,000 people.
In the four weeks since my last post, greater Downtown Seattle's largest single residential block fenced off as a preface to its shoring permit (1,179 units on two acres), two blocks of Google offices with some housing on top started site prep, a medical research highrise site fenced off and held a ceremonial groundbreaking, a 520' office tower got a master use permit and started demo, and a 12-story apartment also started demo. This will be another busy year for starts.
That's a really low apartment number for Chicago. Maybe it feels like more on the ground because they're mostly highrises in a small percentage of the city. Of course Chicago is always HUGE for jobs in the core.
Seattle had a Downtown workforce report today that focused on commute modes. It said jobs grew from 202,000 in 2010 to 247,000 in 2016, similar to the Chicago percentage. Of the added 45,000, over 31,000 net used transit, 9,000 was non-motorized, and about 2,300 each were rideshare or drive alone. This is omitting 6,500,000 sf of commercial or institutional office space under construction or with workers currently doing site prep, which would fit another 26,000 to 30,000 people.
In the four weeks since my last post, greater Downtown Seattle's largest single residential block fenced off as a preface to its shoring permit (1,179 units on two acres), two blocks of Google offices with some housing on top started site prep, a medical research highrise site fenced off and held a ceremonial groundbreaking, a 520' office tower got a master use permit and started demo, and a 12-story apartment also started demo. This will be another busy year for starts.
But Seattle's population is increasing overall. In levels as a sunbelt city. It better show better #s over Chicago basically growing very slowly. As it is in theme North and Midwest. Having real winters.
But Chicago's Core is booming. It is really what a core is and a most quintessential downtown in the Country - Not NYC.
It keeps proving the doomsayers wrong. Seattle is basically a city with far less issues. Yet realize how Chicago's core is unstopable it seems. All are impressed by it and corporate America notices too.
Of course Condo's are not included. Seeing a upswing again too. But it is a city that has boom periods its in. But mostly based on the economy too. The crash of 07 hit in the peak of a boom for Chicago. It killed a few super-talls even under construction. Now a few are again being built.
Yeah, I've worked in real estate investment and development for 15 years now and have focused a lot on Chicago personally (out of interest) and I was very surprised that 2016 wasn't the year the huge apartment binge in Chicago didn't finally spread out and morph into new condo highrises. There are a few here and there, but it's been almost 10 years since any meaningful condo building downtown. Instead it's just apartments apartments apartments. Of course the apartments being built these days are NOTHING like what used to go up. Apartments there days are all quite luxury to super luxury and $$$$$$.
9,104 housing units went up in the city this year and 19,469 in the metro. Those units in the city were almost all within the downtown and north/northwest side areas within 5-6 miles of downtown. So around 10% of the metro population wise is seeing 47% of all new housing construction. Shows how much the other 90% of the metro has slowed down. Not declined per-say, but slowed down. Especially the suburbs, which are barely seeing half the growth despite the fact they're 70% of the population and had been the huge growth engine for decades now.
There is condo building in Chicago, but it's almost all 3-flat to 6-flat buildings around the north lakefront areas and the northwest sides near the 606 trail and up through Logan Square/Milwaukee Ave corridor.
There's a 3-flat luxury condo building going up two doors down from me, another one across the street and a few doors down and another one directly behind us on the other side of the alley. It creates for a lot of eye candy and seems like a ton of construction, but it's only 9 units overall. Still those three buildings combined will sell for around $7,000,000 of added real estate valuation.
It's still heavily apartments the past few years, which are almost universally 5-unit+ buildings.
The past three years:
Single Family: 1,652
2-4 Units (condos): 1,189
5+ Units: 17,763
^Perhaps the condo switch is due to the pricing threshold: I had heard that condos don't make a ton of sense financially until the median home price is at a certain threshold -- about $275K.
In Downtown Seattle's case, condos have been about 1,000 of the 23,000 units in the current boom (greater Downtown). For a highrise condo to pencil, sale prices need to be in the $800/sf range, a number that's been rising quickly as land skyrockets and construction escalation has been averaging 5% annually. That's obviously pretty high end, and a limited market.
But the cost for rentals has had the same issues. There are three major differences in my mind. One is tight mortgage lending standards. Another is my state's defect liability law, which nearly guarantees a lawsuit and series of fixes at a certain moment after completion. The law adds to both construction cost due to the heightened record-keeping required, and to the insurance cost even if you can get insurance at all. The third is the difficulty of getting development financing. The old presale model still has challenges because consumers hesitate to take the leap and both developers and lenders don't trust the value of an earnest-money deal anymore. The result is that so far, the only condos that have started so far have been by firms with large amounts of equity and no need to presell.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
