By Deborah Goonan, Independent American Communities
This week I read two related reports about the high-end real estate market – most of these involving luxury condos.
First, the FBI has just announced its investigation of parties involved in cash purchases of luxury real estate in Manhattan and Miami to “secret” buyers that hide behind shell corporations.
Authorities cite concerns over money laundering, and promises to expand its investigation to other locations in the future.
U.S. Will Track Secret Buyers of Luxury Real Estate
The use of shell companies in real estate is legal, and L.L.C.s have a range of uses unrelated to secrecy. But a top Treasury official, Jennifer Shasky Calvery, said her agency had seen instances in which multimillion-dollar homes were being used as safe deposit boxes for ill-gotten gains, in transactions made more opaque by the use of anonymous shell companies.
“We are concerned about the possibility that dirty money is being put into luxury real estate,” said Ms. Calvery, the director of the Financial Crimes Enforcement Network, the Treasury unit running the initiative. “We think some of the bigger risk is around the least transparent transactions.”
The second article focuses on how the flow of money for very expensive real estate does not help owners and residents.
Miami is Now the least expensive housing market in the nation, for both home buyers and tenants.
So much for the industry’s widespread myth that condos provide “affordable” housing options for the people. No, in cities like Miami, New York, Denver, Los Angeles, Chicago, and more, condominiums are real estate commodities that often serve as a shelter for foreign and domestic wealth.
As wealthy Brazilians snap up Miami real estate, few benefit
Facing a teetering economy at home, wealthy Brazilians have been pouring money into what they increasingly see as the safest place to invest: South Florida real estate.
So are Argentinians, Colombians, Mexicans, Venezuelans, French and Turks — almost anyone with money to shelter, a direct flight to Miami and a shaky economy to flee.
And almost no developer expects the demand to stop.
Yet Miamians as a whole have scarcely benefited from the glitz. Wages have actually dropped for Miami workers in the past year. Area unemployment tops the national average. Miami contains the largest share of renters in the country who devote over 30 percent of their pay to housing — the level the government deems burdensome.