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Comment by michaelochurch | Hacker News Reader

The "Manhattanization" argument always struck me as odd. How is a mess of ugly, uncomfortable five-story buildings (at ridiculous prices) superior to an 80-story tower of modern housing? Sure, the tower is more prominent, but it frees up space for parks and makes housing cheaper. These people should either have the courage to say, "We're trying to keep housing costs artificially high and rob people" or get out of the fucking discussion.

Manhattan is expensive, but relative to the local job market, it's cheap. It has its problems, but it's relatively smartly designed. San Francisco is expensive, relative to the job market. Even in California, it's almost impossible to crack $175,000 doing real work, and every corrupt official in Asia has bought housing in SF and the Valley, driving prices into the millions.

California seems to insist that it is building the future, and yet it lives so much in the past.

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Not liking "Manhattanization" is fairly common in continental Europe as well, but it mostly works out because we build lots of housing on transit lines, so you don't have to dump everything into huge condo towers right in the city center. As for why? Part of it is that it's not really Manhattan people are worried about turning into (at least that was built over many decades and has varied and interesting architecture), but Miami. Or the Spanish coast. Older buildings built during various eras, with varying architecture/history, and a "human scale" that doesn't block the light/sky, are more popular than tearing it all down and replacing everything with a rash of Miami-style high-rise condo towers. It probably doesn't help that there was a little openness to "modern high-rises" in the 1960s-70s, which led to some really terrible-looking monstrosities that have aged even less well than they first looked, now standing as monuments to "welp, let's never let the developers do that again".

However, you can still fit quite a lot of people into 5-story buildings if you build them densely over a region and connect them well with transit. I don't think the problem with the SF Bay Area is that it has 5-story buildings, but that for the most part it doesn't have 5-story buildings, rather 1-2 story houses with yards. The urbanized part of SF is tiny, effectively a small part of the eastern side of the city around downtown, SoMa, and the Mission. Not even the Sunset or Burlingame are built up with 5-story buildings. And Palo Alto, despite being both a university/research and business hub that has housing demand sufficient to support much denser housing, is instead occupied by things that look like countryside vacation homes, failing to even approach "medium-sized town" level of density, let alone some wild dream of getting near the density of 5-story apartment buildings.

...and the funny thing is that the majority of Manhattan's residential real estate is, in fact, a mess of ugly, uncomfortable five-story buildings (at ridiculous prices).

I'd estimate that less than 5% of Manhattan's residential space exists in buildings taller than 20 stories, and maybe 15% of said space exists in buildings taller than 5 stories.

Right. Manhattan isn't even that "Manhattanized". Most of the high buildings are in the Financial District and Midtown, where few people want to live.

You are 100% correct, but interestingly more and more high rise stock is going residential. These are just a few examples, but check out 520 West 41st street (106 floors of residential) or 45 East 22nd Street (60 floors of residential). That's hundreds and hundreds of apartments going on tiny footprints. The one on 22nd street is replacing a 4 story nondescript building, in almost laughable fashion. The major buildings going up on Park Ave, in Long Island City, and all along the Brooklyn water front are all residential.

There seems to be a glut of office space, so for now this is where the market is going. Much of it is luxury unfortunately, but not all of it.

And all of the new construction tall buildings are luxury condos, which are barely "affordable" in Queens and start in the millions on Manhattan. I think something like 40% of them are actually even occupied year-round, instead they are used as investment/offshore holding/pied-a-terre for the absurdly wealthy.

Another good comparison might be Singapore, where people live in residential high rise towers with plenty of space for greenery in between. (Hong Kong also has high rise residential, but not nearly as much greenery in the city centre.)

My favorite aspect about Singapore is that 85% of people live in "public housing", mostly under 99-year leases, which, per Wikipedia:

"is generally not considered as a sign of poverty or lower standards of living, as compared to public housing in other countries. Although they are cheaper than privately built homes in Singapore, they are also built in a variety of quality and finishes to cater to middle and upper middle income groups"

They are publicly built, but people can (and do) buy them from the state. I was living in a public housing project from the 40s (Tiong Bahru) when I was living there. It was one of the earliest such projects, and is now a conservation area. In the current market, my old flat with 4 rooms, two bathrooms, 1 kitchen would net around 1.2 million SGD. I was renting from the private owner for 4k SGD a month.

5 story buildings would be great - it would be closer to the density of Brooklyn.

Most buildings are uninsulated, two-story split-level.

It would be interesting if you would post roughly how many corrupt officials you believe there are in Asia and approximately how many housing units they each purchase.

Looks like a figure of speech to me.

It was less ambiguous last time they posted it:

https://news.ycombinator.com/item?id=7926038

Edit: And another time:

https://news.ycombinator.com/item?id=7964831

I believe he's referring to this: https://news.ycombinator.com/item?id=7963678

It's well-known that Russian and Arab billionaires keep Manhattan real estate (usually bought through shadowy shell companies) so that, if their people ever revolt and bring them to justice, they have a place to hide. There's so much money laundering it's sickening: http://nymag.com/news/features/foreigners-hiding-money-new-y...

Generally, the corrupt scum of Europe and Africa and the Americas focus on New York while the corrupt scum of Asia (where half the world's people live) tend to use California. I'm not sure if that's because geographical proximity matters, or if it's something else.

In addition to the purchase of safety housing by corrupt foreign officials, much bigger is the secondary market in U.S. real estate that exists because of this purchase pattern. The fact that every overseas scumbag wants a U.S. house (preferably a high-value one, because if your assets are frozen and have to change your identity, you may have to borrow against the house for 3 years while your fixers buy you a resume and get you able to work legit) in case shit goes seriously wrong, U.S. real estate has become a store of value.

I don't know the numbers. I don't think anyone does, but as for how much housing is being bought by foreign scumbags (or to sell to them, but speculators betting on scumbaggery) it's probably on the order of 1-10% on the high end, and possibly much higher (10-50%) on the ultra-high ($5M+) end. That might not seem like a big deal, but there are two things to consider. First is the push-down effect. Billionaires buying penthouses push modest millionaires into 3BRs and upper-middle-class families into 1BRs and the middle- and working classes out. It propagates down the socioeconomic chain, making everyone pay higher prices.

The second issue is extreme price inelasticity. 1% supply destruction doesn't increase prices by 1%, as one might hope or expect. It can cause them to double.

Why not increase the elasticity of supply? Ie make it easier to build more?

I got to about he sixth repetition of the word "scumbag" before I stopped and thought, "what is this, a michaelochurch rant?" And went up to check the username-- oh.

So my negativity toward unethical people has a distinctive character? Worth knowing. Thanks.

In all seriousness: yes, yes it really does.

I don't have the link, but I read somewhere that foreign investors (I think this was data upto last year - things may have changed fast) don't make up THAT much of the market, and only for the 1M+ homes, which is way above median price in the US.

Way above median for the US as a whole, but according to the article $1M is close to the median in SF.

I read somewhere that foreign investors (I think this was data upto last year - things may have changed fast) don't make up THAT much of the market

Price inelasticity. A 1% supply destruction is going to have much more than a 1% impact on prices. Possibly 20%, possibly 2x.

and only for the 1M+ homes, which is way above median price in the US.

This problem isn't felt out in the Midwest, because you're right: corrupt officials aren't interested in $300,000 houses in Wisconsin.

On the other hand, middle-of-the-road San Francisco houses, at $1.5 million, are ideal for a scumbag trying to hide from extradition and reprisal. You're going to have a hard time bringing assets over quickly, so borrowing against your house is how you're going to get your first few years of "living money" while your fixers buy you a resume and references and set up your career (this takes about 3 years, for an executive-level makeover) over here. Bay Area houses are also well-located for general money laundering, for obvious reasons.

The Chinese real estate market in general is very depressing: high prices, lots of uncertainty, no good bargains without buko guangxi. The smart money in China looks to a more stable/growing market to invest in, and the USA is very accessible. Its not necessarily all gray money (or even black money) feeding the buying, but there is probably some of that.

I'm sure there is some overseas participation in the San Francisco housing market. And San Francisco does have a high vacancy rate (relative to the U.S., per the 2010 census).

That's an interesting situation to try to understand. It's not an especially sound basis for an angry rant about corrupt foreigners ruining the housing market there.

The corrupt Chinese officials probably have more to do in ruining the housing market in China. They also have "retirement plans" that involve setting up their kids in a University/House abroad in some country without an extradition treaty (see http://en.wikipedia.org/wiki/Naked_official). But most of the money coming into the states from China is probably legitimate (or at least mostly legitimate, as much as can be said for the micro corruption that occurs).

Understood that he ranted, but Chinese monetary policy, along with the fact that the ultra-wealthy in China are often politically connected rather than talented founders, has certainly created a situation where tons of Chinese investment is buying up housing stock in any city which has seen a steep rise in prices.

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