"Wealthy Mansion Owners Report Buyer’s Remorse Amid Nationwide Affordable Housing Crisis"
Wealthy Americans who built or bought immense mansions are suffering from buyer’s remorse, the Wall Street Journal reports. Some have fallen so far out of love with their quarter-acre castles that they’re downgrading to mere 3,000-square-foot luxury condos.
The Journal story recounts how multi-millionaire businesspeople — models of the standard American success story — have come to regret sprawling homes that require large maintenance staffs and constant upkeep expenditures. Among the complaints: “the problem of tracking down family members when they are out of shouting range” in Claudio Stivelman’s 11,000-square-foot Florida home, home wireless networks comparable to what Google maintains at its headquarters, and having to keep “at least one daily housekeeper on staff for every 5,000 square feet of living space.” All the staff required to maintain John Blazevich’s 51,000-square-foot house left him feeling deprived of privacy.
Just one in 33 homes built in 2013 was larger than 5,000 square feet, the Journal says, and the sorts of ultra-massive mansions it profiles make up less than one quarter of one percent of all homes for sale on the real estate site Trulia. When such grandeur stops being any fun for the people who buy these estates, offloading them onto the next one-percenter is a special challenge too: the houses are so big that realtors have to make sure prospective buyers don’t get bored on the tour.
Stories like these about opulent homes and the discontent of the people who live in them are especially striking given the way that the rest of the country lives today. Rental housing is scarce, and affordable rent even scarcer. Half of the renting populace nationwide spends more than 30 percent of its income on rent, the level that housing experts define as unaffordable. One in four spends more than half their income to keep a roof overhead and utilities running. Rent costs fluctuate dramatically from place to place, but at the national median of $769 a month, a person could barely afford a few hundred square feet of apartment in many major cities.
The combination of high demand and low supply of rental housing is putting middle- and low-income American families in a vice. What is painful for those people is an opportunity for savvy investors, however, and Wall Street firms have become the largest landlords in America over the past two years. By buying up vacant homes for dirt-cheap prices at foreclosure sales and sheriff’s auctions and leaving actual day-to-day maintenance and rent collection to unscrupulous middlemen, hedge funds like Blackstone have found a way to monetize the misery that faces middle-class renters.
But at the top, the sorts of people who appear in newspaper sections dedicated to mansions are thriving in the post-Recession economy. Without a serious investment in increasing the supply of affordable housing for everyone else, the country faces something worse than just a demoralizing stratification in the standards of living for the rich and the working-class. According to research on real estate and economic inequality summarized here by Quartz’s Tim Fernholz, the continued bias toward high-dollar housing threatens to undermine economic growth on a broad enough basis to hurt everyone.