Trump Didn't Cause The Urban Housing Bubble, But His Policies Are Likely To Make It Worse
Last week, urbanologist Richard Florida did a post ostensibly about Vancouver, but completely relevant to all the great cities of the West. As he said, "Young, affluent, highly educated people have flowed back to downtown cores in cities like London, New York, San Francisco and Vancouver. Good jobs, better restaurants, higher tax revenues and even high-tech startups have followed. But this dramatic back-to-the-city movement also has its dark side, giving rise to what I call the new urban crisis, which registers itself in increasingly unaffordable housing and a growing divide between rich and poor.
Rising inequality in Vancouver is driven by the decline in stable, blue-collar, middle-class jobs, which make up just 15 per cent of the region’s jobs. Highly paid professional, knowledge and creative jobs make up 36.5 per cent of jobs, while lower-paid service jobs account for 47 per cent of jobs.Friday an OpEd in the NY Times by Oliver Bullough, Offshore Money, Bane of Democracy, looked at the problem from a different perspective. This is something I'm particularly tuned into right now because my best friend, an inner-city public school teacher, is trying to buy a house and keeps finding himself out-bid even in neighborhoods considered "sketchy." Here in L.A. the money buying up local real estate-- and now at every level-- in coming from China. As Bullough points out, "China was the leading investor in real estate in the United States by the end of 2015, with $350 billion in related investments and holdings."
Vancouver is seeing not just the decline of its middle class, but of the neighbourhoods such families called home. Middle-class areas, which made up more than 70 per cent of Vancouver neighbourhoods in 1970, have fallen to less than half by 2005, the last year for which data is available. There are likely far fewer today.
As the educated and affluent flock back to urban cores, a great deal of poverty in cities like Vancouver has shifted to the suburbs. Indeed, these places are morphing into a new kind of “patchwork metropolis,” with small areas of the advantaged concentrated downtown near subway and transit stations or in affluent suburban areas, surrounded by much larger spans of concentrated disadvantaged.
The new urban crisis has engendered a backlash that resulted in the rise of the late mayor Rob Ford in Toronto, the Brexit in Britain and Donald Trump in America.
Almost one-third of top-end property purchases in America’s biggest cities are suspect, according to the Financial Crimes Enforcement Network, the body at the Treasury Department whose task it is to protect the United States from money laundering. The government recently granted FinCEN authority to peek behind the veil of secrecy provided by offshore shell companies, and what the bureau has seen is disturbing: There is a flood of dirty capital pouring into United States real estate, and it isn’t clear who owns it.How attractive will the glittering big cities remain if service workers and even middle class blue and white collar workers-- think school teachers, for example-- can't afford to live in them or even in their close-in inner suburbs? What Florida refers to as the "creative class" in his writing-- that helped spark the urban renewal-- are already being squeezed out of affordable housing in many cities en masse.
...Greedy rulers around the world steal billions from their people, then disguise the money and stash it offshore, usually in the West. The extraction of this much capital cripples the economies of source countries like Afghanistan, Nigeria or Ukraine, and breeds insecurity and violence there. Offshoring is also a problem for host states. If a government doesn’t know who owns the country it runs, how can it know how those owners will behave in a crisis?
...Law enforcement in the United States leads the world in investigating and prosecuting corruption, but the country still lags badly in terms of transparency, despite FinCEN’s new powers. Britain has a freely accessible, central online register of all companies, and anyone who creates a new company has to declare its actual owners. The system is flawed, not least because the information provided is not checked. But it’s a good first step toward ending the abuses enabled by anonymous companies. America should adopt something similar.
The British Parliament is also considering implementing “unexplained wealth orders,” which would force criminals or foreign officials to justify how they came to own luxury goods or expensive real estate. Those who cannot prove they secured the financing legally would see their property confiscated.
These two measures alone can’t be enough to reveal the true owners of the anonymous money that is buying up so much of the West. But they can go a long way toward depriving dictators and thieves of a haven for their dirty cash, while helping officials in democracies regain control over who is buying the countries they were elected to run.