Not everyone will agree, but I’ll say it:: synthesizing the market and planned economics to produce economic strength is the quickest path to economic and political empowerment for all people, especially traditionally marginalized cohorts such as women and immigrants. When liberalism made “peace” with markets, prosperity and liberation ensued. But, “left and right” has lost most of its descriptive punch since the French Revolution.
So, what? So, after COVID, civil fissures, and disgust by the people, plenty. Let’s visit New York City which is still reeling from the effects above.
Landlords Miss Paper Bags Full of Money
In NYC, we can’t ignore the reality of a steep fall in commercial values in 2021. The reckoning became clear even before Covid, as online commerce changed the landscape. The financial sector were stalwarts of NYC commercial real estate, but that began to slip in 1987, thanks to overbuilding on speculative properties! Same with the dot.com crash in 2000 and the economic debacle of 2008. After 2008, New York City barely had time to digest that oversupply. Covid doesn’t follow any known economic cycle, and people are losing their heads.
The crisis comes at a time when sales and prices in the luxury market were already under pressure. “It’s not like New York City is all of a sudden on sale. New York has been on sale for the past 24 months,” said Tal Alexander, a luxury agent with Douglas Elliman.[1]
Yes, a big slice of speculative value will disappear in a few years. Yet, the actual brick-and-mortar surplus will be with us for years. Pulling apartments out of the marketplace, limiting supply while many people can’t get housing is one of two things: a savvy business practice or a cynical attempt to bid up rents in an environment with too much inventory. Suppose the owners abandoned that kind of thinking by supplying what the market needs. The outer boroughs and Manhattan can fill up existing housing and apartments with just the people that New York City needs: strivers, immigrants, the marginalized, and, in essence, people with an idea.
The supply is there in the shadows. Relatively sober financial advisors think it’s an excellent time to snap up properties because, in the billionaires; game of real estate, the door is slightly ajar.
“But those barriers have come crashing down – and now it’s possible to build REAL wealth through real estate at a fraction of what it used to cost, meaning the unfair advantages are now available to individuals like you.”
Motley Fool 3/1/21
It’s reasonable to believe that holding back properties is not a mug’s game: it’s hard to deduct rental losses on your current tax returns,. But, the magic phrase “loss forward” shows you can toss the disaster from 2021 into 2026 or beyond.
AND, in the case of New York City, depreciation is whack! Interestingly, for those who care about land and land use, depreciation helps the big dogs that roam New York, those Invested for the long haul. Ironically, one cannot depreciate land on taxes.
“Average” people and the progressive reformers are dealing with necessities: how do they repair and unleash the long- subsumed economics of neighborhoods and localities? This organic system to the margins by decades kowtowing to the high rollers with abatements, oh-so-sweet lending rates, and the “how can this be legal?” practice of hiding the actual ownership of land or condos. A law designed to make public the existing owners of an LLC was brutally stomped by the aforementioned big dogs. You’d need a Nancy Drew to follow the clues.
Most of the neighborhoods we are trying to help rebuild, thrived with local building and loan associations, which are now almost extinct. People like New York State Assemblyman Ron Kim, who is of South Korean descent, would recognize the measurable success of making money-capital available locally. Like your local farmers’ market, your community’s produce should be grown and raised in the community.
New Yorkers who were immigrants or migrants in the early part of the twentieth century bought and sold to neighbors and worked in local enterprises that made a profit. It was a special day when somebody from Queens went into Manhattan except for social activities, educational desires (the museums), or the Garden. The new spirit of “bringing it all back home” acknowledges the need to maintain local control, local financing sources, and creating local jobs.
Let the condos rot and let a thousand bodegas, co-op apartments, and barbershops bloom.
[1] https://www.wsj.com/articles/covid-19-new-york-real-estate-11597939146
