But that makes no sense. Even if everything is being driven by a global glut of cash trying to find a home, that cash still reacts to supply and demand. Assuming you're correct that these are all Ponzi style speculators (a claim I'd love you to provide evidence for), there must be a limited number of these speculators. Increasing supply inherently reduces their demand, as you've satisfied some of these speculators.

Of course what we should be after is the end goal. If this is all speculation and we let them build anyway, where do we end up? Their bubble will pop with or without our help, but we end up with a lot more building space - meaning lower rents.
It makes no sense from a social standpoint Matt, but that's not what capitalism is about. Just look at the most recent real estate bubble - tons of houses were sitting empty. by your logic, the real estate crash should have solved homelessness - but in reality the banks that now owned these houses preferred to hold on to them rather then sell them at whatever price they could. Same goes for these luxury apartments they're building. If the bubble pops they're not going to be letting us live in a luxury building for $600 a month. At that point they'll say running the building isn't profitable and let it sit empty or mostly empty. Not to mention that the bubble popping will likely hit poor folks in our community the hardest - so in the end there is no benefit here for people who need low income housing. That is the true logic of capitalism.
I have never seen anyone provide any evidence to support the claim that luxury high rises are being constructed or sold to international speculators. Add this article to the list.
This is also a big driver behind the vacant storefronts. The owners will buy the building and kick out the old tenant by raising the rent to pay for the new much larger mortgage. They will then choose to wait for a tenant willing to pay the new rent rather than renting it out on the cheap.
Building sold for $300,000 in 1970 paid off years ago and rent was $1,000 which covered the mortgage.
Building sells now for $3,000,000 and the new owner will have $10,000/mo mortgage so rent will be close to that too. The new owner figures it's better off sitting empty for a year at $12,000 loss and then getting a corporate chain tenant willing to pay $120,000/year. In the meantime the value of the building has gone up 5% so that $12k loss in rent is more than absorbed.
@3 It's not hard to dig up some of the sources, which usually list their survey set (if not their actual data):………
@2 Picking a random cul-de-sac home in Bothell, the value dropped from $482k in 2007 to $295k in 2011. That's certainly not free, but the bubble popping absolutely dropped housing prices substantially. Yes, banks kept homes off the market to keep from realizing these losses, but many homes did hit the market and were bought at fire sale prices. And guess what happened by the next boom? All of those vacant homes have been absorbed, meaning prices have shot up much less than they would have.

@4 I don't buy it. That could be true for a building owner or two, but I can't see everyone sitting on their vacant storefronts hoping to win the retail lottery. It's bad economics. Rents and land values don't always go up, and landlords know that. In a world where most are speculators those that aren't are the ones that end up rich.
accelerated development will not weaken the force that's pushing property values up

I knew it. The "free market" doesn't actually care about anything except 'the bottom line'... profit. It will go where the most profit can be made. Screw the actual demand for housing, when instead speculating is more profitable. This is why capitalism needs to be trained, it's like pure id, with no superego reining in its most base impulses.

Things capitalism will never solve: poverty, homelessness, crime, drug addiction...
Things capitalism will never create: a just policing system, equitable medical care, a healthy diverse city, reasonable urban transportation, etc...
I agree, that's why economic disparity (too many rich people who are too rich) is a blight on society. Because it ignores the needs of the majority at the expense of a lucky, pre-selected minority.
"Things capitalism will [would] never create: a just policing system, equitable medical care, a healthy diverse city, reasonable urban transportation"

A few more: Equitable, excellent public education. Basic scientific research. A diplomatic corp. A military that serves the president. Clean energy technology. Constraints on global warming. A space program. An interstate highway system. Human rights activists. Farm subsidies. Wildlife conservation. The internet.
Charles is right. Hiding assets from China & getting a green card at the same time for "investing"

It doesn't have to be every building owner sitting on unrented property to make an impact; but just enough to skew the supply-demand paradigm. And with many of these properties, particularly in the residential sector, mortgages aren't even an issue for purchasers, a significant number of whom are engaging in cash sales, which, according to industry tracking indices is currently hovering around 32% in this market. That's nearly one-third of home purchasers who don't have to worry about making a monthly "nut"; instead they can just sit on that empty $600,000 condo or townhouse because they don't need for it to actively generate income; it'll do just fine passively increasing in value with nary a soul living in it, because leaving it empty artificially tightens the housing market by reducing supply, thus driving up prices overall.

And for these owners, even a bursting real estate bubble would have only a negligible impact. If the market were to go completely south tomorrow, they would still own their property outright, so there's no risk to them of foreclosure, no desperate need to renegotiate financing with a lender, and still no strong incentive to make it generate income. Sure, the property loses value in the short-term (and there are of course property taxes still to be paid), but in this case, even that's not really an issue, because the investment hasn't been made primarily for the purpose of generating revenue or increasing value, but rather as a means of sheltering Capital. And if you can afford to put $600K on the barrel head to begin with, $3,000 or $4,000 in annual property tax assessments is just pocket change.
@6, Another factor keeping these places empty is tenant rights. Once you start paying rent you gain a few rights that can make it much harder for the landlord to get you out and rent to someone else at the higher rate. Abercrombie might not want to wait for Artisanal Umbrellas to vacate that location. Thus the lower rent that AU paid becomes a net loss by losing AF as a potential long term tenant.
so if google or goldman splits its stock 2:1 tomorrow, the share price will not b lower 1 week from now than it is today? that idea is definitely after Keynes

there is no situation in which projects with high up-front costs that pay off slowly will b built without finance

why aren't the Chinese speculators doing the same thing with sock factories, or solar power plants? supply is not tightly constrained in sock manufacture or electricity generation - hence "a surplus of stuff" - so there's not reliable profit in adding new plant, or identifying which operations still operate gainfully. free enterprise will oversupply almost any commodity to the point of crisis for producers - the oil drillers have demonstrated this recently; let them build, and they will build themselves out of business

celebrate the readiness of foreigners to pay up front for the manufacture of the world's most valuable commodity, right in the middle of our biggest population centers, and deepen our symbiosis by building more safe assets for them, until the houses are so numerous that speculators can't count on the next gambler catching the hot potato. that's how we'll house the US, soak up the global savings glut, and employ the angry, unskilled Trumpenproletariat in noble trades
Charles, a good Marxian should never make the mistake flows for stocks. include some figures, too!

can ya'll please give an example of a state that adequately provided those non-market institutions before capitalism? sure helps to collect taxes from a wealthy economy

why should we be upset that a bunch of nouveau riche from countries that have suffered consecutive mass-tragedies in my parents' living memory have found safe stores of value (one of the crucial softwares of civilization)? how should housing costing tens/hundreds of thousands of dollars per unit and yielding fractions of that per month b built without finance? we should legalize homebuilding in Seattle, and let wealthy foreigners pay the upfront costs

if you let capitalist firms produce a commodity freely, they will reliably oversupply it to the point of producer crisis. we saw this recently in the oil drilling business, numerous wells deactivated in the US and fiscal messes in net vendor countries like Saudi, Venezuela and Nigeria. commodity producers account for almost all of the hurt in the S&P500 this year. almost every journo piece critical of Uber cites drivers aggrieved by fare decreases. they will deal with warlords, street urchin brokerages, customs officials and freight forwarders just to sell you a $30 pair of New Balance. hence "a surplus of stuff and a global savings glut". surplus housing sounds nice, to me.
@10 If this was actually happening, we'd have a high vacancy rate. Seattle's at a near historic low for residential vacancy. This is just a fear that Satellites have dreamed up because it's happened in Paris. But it wouldn't even be an issue in Paris if they let themselves build up. So there are a few empty units - who cares if you let the market build a lot of new units.

@11 I knew this was an issue for residential tenants, but didn't realize it was the same for commercial. Kind of shooting ourselves in the foot with that one, right? Nobody will rent to low-rent tenants because we've given low-rent tenants too many rights? Ouch.

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