Who is Buying Seattle? The Perils of the Luxury Real Estate Boom
Chuck Collins
Introduction:
Seattle is experiencing a luxury real estate boom, with thousands of new luxury residential and rental units in different stages of development. A decade from now, Seattle’s skyline and population demographics will be fundamentally altered by decisions being made today.
This boom does have benefits, providing jobs in the building trades and increasing property tax revenue for the city. But the boom poses numerous perils for a city like Seattle and is not helping address Seattle’s acute affordable housing crisis. This report encourages policy makers to look beyond the promotional hype and ask critical questions about the disruptive impact of Seattle’s luxury real estate boom.
Among the negative impacts the luxury boom invites higher land and housing costs, a more unequal city, wealth storage and phantom capitol, neighborhood apartheid, and more.
Key Findings:
- Of the 1,635 luxury condos, 12 percent are owned by limited liability companies (LLCs) or trusts that mask the real owners and beneficiaries.
- At the 99 Union condominium development, 47 percent of the units are owned by trusts, trustees, LLCs, and corporations. In only 19 percent of units was the owner registered to vote there.
- The more expensive the unit, the more likely it is to be owned by a trust, trustee, LLC, or other corporate entity. 3 percent of the LLCs owning Seattle luxury properties have organized themselves in the state of Delaware, the premiere secrecy jurisdiction in the United States. In a great number more, we could not trace the registration to a level where we could exclude Delaware, making the 3 percent figure the “floor.”
- Of the 1,635 units, only 39 percent of owners are registered to vote at the property, a figure nearly 40 percent lower than that of Washington State as a whole.
Across the world, skyscrapers and mansions are rising in globalized super-cities, a form of “wealth storage” for the world’s wealthy who are seeking to diversify their asset holdings.Seattle is by no means the leader in this area. As a result, there are opportunities for municipalities and states to regulate this place-based investment in order to offset the disruptive impact it is having on communities. This can include taxing transactions and vacancies, increasing property taxes on luxury units, and requiring greater transparency to discourage criminal activity and tax dodging.
This report addresses these issues in the context of Seattle’s affordable housing crisis and stark racial wealth divide.
Seattle, like a lot of global cities, is experiencing a luxury building boom. While one of the drivers of this is the growing number of U.S. super-wealthy, global investors are adding fuel to the fire.
We looked closely at 8 completed luxury housing projects, described in this section of the report. These buildings have 1,635 units with an average condominium price of $2 million dollars. We compared ownership records to Seattle’s database of registered voters to estimate how many units in our luxury buildings are primary residences. Overall, only 39 percent of residential units had the same person registered to vote as the person on the deed.
Analysis of these 8 luxury Seattle condo buildings found that the more expensive the unit, the more likely it is to be owned by a trust, trustee, LLC, or other corporate entity. Moreover, across our 8 buildings we found that the greater the average taxable value of the units, the lower the percentage of units owned by individuals, compared to companies or trusts.
There are obvious benefits of luxury real estate in Seattle. Construction creates jobs in the building trades and high-end real estate contributes to the city’s tax base. And there will be some jobs in the “service-rich lifestyle” sector. But there are also a number of reasons why communities like Seattle should be concerned about the growth in luxury real estate. Including:
- Disruption to Affordable Housing Market
- A More Unequal City
- Potential for Money Laundering and Criminal Activity
- Capturing and Corrupting Power
- Contributes to Unfair Immigration Policy
- Energy Consumption and Climate Change Risk
- Neighborhood Apartheid
We urge the City of Seattle to monitor luxury housing activities. This report provides a window into several existing buildings. But the city should monitor the thousands of new units coming on the market and analyze their ownership patterns.
- Require Municipal Disclosure of Beneficial Ownership in Real Estate
- Leverage Washington’s Real Estate Excise Tax to capture more value
- Institute a Vacancy Tax and Ordinance
- Require New Buildings to be Carbon Emissions Neutral
- Support State and National Transparency Policies
Help Spread the Word: #WhoIsBuyingSeattle
A new IPS report #WhoIsBuyingSeattle by @inequalityorg looks at where hidden wealth meets Seattle’s luxury housing by taking a snapshot of luxury condos and their ownership and occupancy trends. Share on Twitter
New report looks into 8 luxury buildings totaling 1,635 residential units with an average value of $2 million – 23x higher than Seattle’s median household income and 28x median black family’s income #WhoIsBuyingSeattle Share on Twitter
12% of the units highlighted in our #WhoIsBuyingSeattle report are owned by LLCs or trusts that obscure the real owners and beneficiaries. In one building it’s as high as 47%. Share on Twitter
A new IPS report by @inequalityorg found 47% of the units at the 99 Union condominium development are owned by trusts, trustees, LLCs, and corps. Only 19% were owned by registered voters. #WhoIsBuyingSeattle? Read more: https://inequality.org/great-divide/who-is-buying-seattle/ Share on Twitter
New analysis on Seattle luxury real estate: The more expensive the unit, the more likely it’s owned by a trust or LLC. 3% of LLCs owning Seattle luxury properties are organized in Delaware, the premiere secrecy jurisdiction in the U.S. #WhoIsBuyingSeattle? https://inequality.org/great-divide/who-is-buying-seattle/ Share on Twitter
Comparing property ownership to voter records: out of the 1,635 units highlighted in new #WhoIsBuyingSeattle report, only 39% of owners are registered to vote at the property — 40% lower than Washington State as a whole. https://inequality.org/great-divide/who-is-buying-seattle/ Share on Twitter
Over 1,640 new luxury Seattle condos will hit the market next year. Who will buy them? Sign the petition to tell Seattle policymakers: protect current residents and increase transparency to find out #WhoIsBuyingSeattle https://inequality.org/great-divide/who-is-buying-seattle/ Share on Twitter
