Have you ever wondered how the median home value in San Francisco is $1.34 million, while someone who makes minimum wage can afford a market-rate one-bedroom apartment in only 12 of 3,007 U.S. counties? The reason, in large part, is that the rich these days have so much money that they don’t know what to do with it. If some latter-day Croesus wants to spend, say, $450 million for a Leonardo da Vinci painting of dubious provenance, as happened last fall, that’s his business. But the effect of the top-heavy wealth distribution on housing prices and availability is unconscionable.
It’s not just rich Americans. The post–Cold War economy has unleashed a vast international upper class of Russian oligarchs, Middle Eastern royals, and African presidents-for-life. China alone has minted 1.34 million millionaires since privatization began there in the late 1980s. The savvy plutocrat is always looking for safe places to stash cash—and the fewer questions asked, the better. If it’s not a private bank in the Caymans or a vault full of art in Switzerland, it’s a condo someplace nice, or four of them, or an entire office building for that matter.
Few places are safer, and less scrutinized, than real estate. Money laundering pervades the global property market and, as a result, turns architects into unwitting collaborators-—ethically, if not legally. One might expect this kind of thing to happen in the ’stans of Central Asia or the less salubrious Latin American republics, and it does. But in Australia? Canada? France? The U.K.? Here in the United States?
Yes, yes, yes, yes, and yes.
Until lately, regulators have largely ignored the mysterious backers of the limited liability companies and other shell corporations that are investing in U.S. property at such exorbitant prices. A few days before Barack Obama left office last year, however, the Treasury Department announced that it would begin identifying and monitoring anonymous buyers. In August 2017, the department reported that about a third of such deals “involve a beneficial owner or purchaser representative that was also the subject of a previous suspicious activity report.”
Floods of dirty money have helped make home-ownership impossible for residents of many cities and compounding the problem, thousands upon thousands of these investment properties often sit empty. Housing vacancy data, from the U.S. Census Bureau, are mind-blowing. In San Francisco’s South Beach neighborhood, 20 percent of residences are unoccupied. In Manhattan’s Upper East Side, 40 percent are. In Malibu, Calif., it’s 33 percent. In San Diego’s Oceanside neighborhood, 50 percent. And in Florida’s Bal Harbor, Miami Beach, and South Beach, more than half of waterfront properties are vacant.
Dirty money is paying for a great many shiny buildings—even a few one might call masterpieces, if one were to ignore the ethics. But we shouldn’t. Architecture can serve higher purposes. The winning projects, people, and groups in this issue of ARCHITECT offer many cases in point: a resilient master plan for a small town in Arkansas, a practitioner who prioritizes the well-being of her Native American clients, a nonprofit that teaches developers of affordable housing about design. These are qualities of great architecture.
