Tag Archives: wealthy

Court says director of “The Queen of Versailles” did not defame film’s subject

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The director of an interesting film about the largest single-family home in the United States was cleared of defamation charges in court:

Lauren Greenfield received a best director nod at the 2012 Sundance Film Festival for her documentary, “The Queen of Versailles.” Now, two years later, she has another victory to her credit, which may ultimately prove more important to her career.

An arbitrator at the Independent Film and Television Alliance ruled that her movie about David and Jackie Siegel was not defamatory. This seems to end Siegel’s effort to punish Greenfield for her film, which centered in large measure on the family’s profligate ways — building a 90,000 square-foot mansion (to replace the 26,000 square-foot home they lived in); spending $1 million a year on clothing, and having a household staff of 19…

Siegel charged the film defamed him and his company. His claims were dismissed by a federal court judge, which is how the case ended up in arbitration.

“Having viewed the supposedly egregious portions of the Motion Picture numerous times, [the Arbitrator] simply does not find that any of the content of the Motion Picture was false,” the arbitrator, Roy Rifkin, ruled.

An unflattering but true story can still be told. But, if the story was not going to be positive, why participate in the first place or go through the whole process after things had turned sour? As I note in my quick review of the film, the story is less about the big house and more about what happens when someone loses lots of money and disconnects from his family. Also see a September 2013 update on the fate of the home.

What happens to “hipsturbia” when the wealthy start building 30,000 square foot homes?

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The “hipsturbia” of Hastings-on-Hudson, New York may never be the same with the pending construction of a 30,000 square foot home:

In this comfortable Westchester County community, many residents like to think of their village as the anti-suburb, jokingly calling it the Upper Upper West Side.

With painters, writers, jazz musicians and web designers liberally represented among the population of 8,000, the village displays an arty, slightly irreverent ethos. Subarus with bumper stickers that say “Make Dinner, Not War” outnumber the BMWs with vanity plates. Teenage rock groups are overshadowed by their parents’ bands; Housewives on Prozac is a local favorite. Residents are more likely to play down their wealth than to flaunt it.

So it came as a surprise when residents learned that a house was rising in their midst that was not only over the top for Hastings, but also called for superlatives even for Westchester, one of the richest counties in the entire nation.

The contemporary structure and accompanying pool house together measure more than 30,000 square feet. The underground garage is 3,572 square feet, larger than most of the Tudors and Colonials in town. On the application for a building permit, the construction costs were estimated at more than $40 million.

Maybe we could think of waves of gentrification: hipsters and creative types (think Richard Florida’s “creative class”) can represent a first wave that is willing to move into edgier (grittier, more authentic, cheaper) areas. However, what happens when these increasingly wealthy and educated areas start to attract the uber-wealthy? How does that big money fit with certain hipster values? The article ends by noting that the wealthy couple are Democratic and the big home features alternative energy, so perhaps it is less about money than it is about having the right progressive values. Big homes might be okay as long as the owners have the right morality about such homes.

The other interesting dynamic is that this all is taking place in a suburban setting, specifically in wealthy Westchester County. Hastings-on-Hudson is fairly suburban in its demographics: 85.2% white, the median household income is over $114,000 (the US median is around $50,000), and over 66% of adults have bachelor’s degrees. In other words, this suburban location may be hipsterish but it is certainly not that diverse in terms of race or social class.

Super rich investing billions in office blocks, hotels

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The global super rich are spending money beyond the dreams of average people on certain kinds of real estate:

The world’s super rich are turning from luxury mansions to hotels and office blocks, as they hunt for bigger property deals to preserve their growing fortunes which hit a combined $20 trillion in 2013, data showed on Wednesday.

The move into commercial property comes as wealth levels rebound after the financial crisis and home values in London and Monaco soar, prompting the rich to look for riskier investments that offer higher returns than gold or bonds.

Wealthy individuals spent $11.2 billion on hotels, offices, warehouses and shops globally in 2013, up from $7 billion in 2012 and three times the amount spent in 2008 after the crash, data compiled for Reuters by research group Real Capital Analytics (RCA) showed.

Such high net worth investors, most of whom come from Asia or the Middle East and made their fortunes in manufacturing among other sectors, often already own homes in cities such as London and Hong Kong, said Jeremy Waters, head of international investment at UK-based property consultants Knight Frank.

This is quite a flow of money. It is too bad the article doesn’t talk about the ROI on these office and hotel properties; what kind of investment can be expected in today’s economy?

I wonder if this means there just aren’t many luxury homes left in the world for the super rich. If so, this could mean builders will look for even bigger and more luxurious homes in the near future.

Americans had biggest new houses ever in 2013

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The National Association of Home Builders suggests Census data for 2013 shows Americans had the biggest new homes ever at over 2,600 square feet:

Preliminary data provided to NAHB by the Census Bureau on the characteristics of homes started in 2013 show the trend toward larger homes continued unabated last year, as did the share of new homes with 4+ bedrooms, 3+ full baths, 2-stories, or 3-car garages.  The average size of new homes started in 2013 was 2,679 square feet, about 150 square feet larger than in 2012 and the fourth consecutive annual increase since bottoming out at 2,362 square feet in 2009.

This is amazing. Housing, particularly bigger homes and McMansions, was fingered as a key reason the economy crashed in the late 2000s as too many residents and banks conspired to produce untenable mortgages. The housing market has struggled since. Yet, several years later, Americans now have even bigger than ever new houses. Why?

To get an answer, just take a look at WHO is buying new homes?  The typical new home buyer in recent years has been someone with strong credit scores and high levels of income.  To the first point, the graph below shows how the average credit rating of all US consumers has remained rather flat over the last few years (blue line), while the average credit rating of mortgage borrowers (red line) took a dramatic jump after 2007.  By 2013, the gap between the two measures was 58 points, compared to 33 points in the early 2000s.

To the second point, the graph below shows the rising trend in new home buyers’ income in recent years.  In 2005, the median income of new home buyers was $91,768.  By 2011, it had increased by more than 17% to $107,607.  It is not too surprising, therefore, to see home size and features continuing to trend upward, given that those buying new homes are precisely the kind of buyers who generally purchase large, feature-loaded homes.

In other words, the bifurcated housing market continues. Those with resources, more income and higher credit scores, can take advantage of these new homes builders are constructing because there is more profit to be made. In the meantime, the construction of smaller homes, those that might be more affordable or reasonable given the moral outrage over big homes in the 2000s, continues to lag behind. If the housing market is going, it is going on the strength of more expensive homes.

We need another piece of data to make this post from the NAHB complete: how do the housing starts in 2013 compare to those for each year since the early 2000s?

Rebuilding the Hamptons, one expensive teardown at a time

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Here is a clear example of American’s preference for new homes over older ones: buying a new home in the Hamptons is much preferred to having an older home.

From Westhampton to Montauk, buyers (and renters, too, especially those willing to write a six-figure check for a summer spot) are on the same attitudinal and aspirational wavelength: new is better, more sustainable, and infinitely richer in amenities than old…

The look of the homes is evolving as well: modern is making a comeback, but modern in the guise of barnlike. “The modern barn is the Hamptons equivalent of the TriBeCa loft,” Ms. Comnas said…

Sure, many of these new houses have classic cedar shingles on the outside, but inside they are chic tabernacles of all that is design-forward, indulgent and technologically precocious. The middlebrow bungalows, Capes and ranches of yesteryear are disappearing, victims of the wrecking ball, fast becoming the most popular tool in the builders’ kit. ”Unless a house has really good bones or is grandfathered closer to the ocean than you’re allowed to build today,” Mr. Davis said, “there’s often very little reason to renovate.”…

“I’m seeing that people prefer new because they want to be the first to use everything in a home,” he continued. “New means instant gratification.”

Sounds like a lot of money is waiting to be spent at the Hamptons. I’ve seen numerous articles from the last few decades about people trying to hold on to older homes in this area but the teardowns appear to be relentless. I’ve never quite seen a footnote like the one posted at the end of this story:

Not every buyer chooses immaculate new construction. The recent sale for $75 million of the 84-year-old Wooldon Manor in coveted Southampton Village set a Hamptons record as the highest for a stand-alone home on a single lot.

Is the purpose of the footnote to reassure that at least one buyer has some sense of history? (And it only took a $75 million home to have some sense!)

More broadly, do teardowns cease to be a public issue when all or most of the homes are teardowns? Plus, are these not really McMansions because they are not mass-produced and require so much money? It makes me wonder if the truly wealthy get a pass on such homes while those who are more middle- or upper-middle class bear a lot of the criticism for trying to imitate the truly wealthy…

Suburban DuPage County to address record number of heroin deaths

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Following a record year for deaths by heroin, DuPage County has plans in motion for 2014:

The call for action in DuPage came months before the county surpassed its year-old record of 38 heroin-related deaths in 2012.Officials say there were 45 confirmed heroin-related deaths in 2013 in DuPage. And depending on the results of toxicology tests, Jorgensen said the final number could climb by one or two.

“If this was gang or gun violence in DuPage County and someone was being killed every eight days, I think the communities would be up in arms,” Wood Dale police Chief Greg Vesta said…

Heroin is more addictive and physically harmful than any other illegal drug, according to Jorgensen, who was a surgeon before becoming coroner.

That’s why, he said, it’s so important for DuPage to have a public education campaign targeted at heroin prevention. One goal of the effort will be to inform families about warning signs and where to find help. The education campaign — called “Be a Hero in DuPage” — will include a website and social media providing timely information, warning signs and resources, officials said.

DuPage County has long been one of the wealthiest counties in the United States. A story like this goes against that image. In a county that prides itself on suburban success, drug use that leads to death is likely viewed as more of an urban problem. Yet, the story for DuPage County and other suburban counties in the decades to come is that they will likely to see more urban concerns including poverty, crime, and more minorities and immigrants moving to the suburbs as they spread within metropolitan regions. It will be interesting to see how DuPage County tackles this issue…

“They get McMansions, we get McJobs”

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One columnist suggests McMansions are for the few thriving in the current economy while everyone else gets low-paying jobs:

The Great Recession ended in mid-2009, but for middle class Americans the economic “recovery” never began.

Times will get harder in 2014 for thousands of families in Bucks and Montgomery counties. As reported in this newspaper, long-term unemployment benefits ceased on Saturday for 73,000 Pennsylvanians, about 6,000 of them in the two counties. These people and their dependents will have the penultimate hope ’n change experience – no job, few prospects for full-time work and no unemployment benefits.

The economic news for the majority of Americans has not been good in recent years. However, I’m intrigued by the argument about who McMansions are for. The suggestion here is that McMansions are only for the wealthy, those who have still done well in the economic crisis. Yet, the typical usage of the word McMansion implies that they are big houses for the masses, not just the wealthy. At the economic peak in the early 2000s, the idea of a McMansion meant that a middle-class American could purchase a large and ostentatious home.

At play here is the relative status of McMansion owners. Are they the nouveau riche who are trying to conspicuously present their wealth? Are they the top 10% of the population? The truly wealthy don’t need McMansions – they have mansions – but in times of more scarcity, McMansions might not be for the masses. Also, the article seems to present its criticism of McMansions from those of lower economic and social standing whereas some of the critique of McMansions in recent decades has come from the top in suggesting the owners aren’t really wealthy or don’t have much architectural taste.

New skinny, tall, and super expensive residential towers in NYC

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Here is a look at a new set of skinny, tall, and expensive condo buildings under construction in New York City:

One such apartment tower under construction, 432 Park Avenue, will have a top floor higher than the Empire State Building’s observation deck. Another will have a top floor higher than any in One World Trade Center, which is officially (by virtue of its spire) the nation’s tallest building.

The 432 Park penthouse has sold for $95 million; two duplex apartments at One57, now nearing completion, also are under contract, each for more than $90 million. Even a studio apartment on a lower floor at 432 Park (designed for staff — a maid or butler) costs $1.59 million…

But what’s most striking about these towers is their shape. The boxy old World Trade Center twin towers had a ratio of base width to height of 1-to-7 (209 feet-to-1,368 feet); an apartment house about to begin construction next to the Steinway piano showroom on 57th Street will be a feathery 1-to-23.

That kind of skinniness, also found in skyscrapers in Hong Kong and Dubai, is shifting the focus of high-rise construction. Twenty years ago, only five of the world’s 100 tallest buildings were at least partly residential, compared with 31 today. They include the Princess Tower in Dubai, at 1,358 feet the world’s tallest apartment house.

These towers are shaped by their clientele: a transnational nouveau riche looking for a second (or third or fourth) home. Having made fortunes in nations less regulated economically and less stable politically than the USA, these buyers want a safe investment as much as, or more than, shelter. And they don’t want to pay New York resident income taxes.

Three things I would like to know more about:

1. It would be fascinating to see who lives in these buildings – though buildings like these tend to guard that information. Is this the in form of conspicuous (sort of) consumption: the pricey and incredibly exclusive real-estate holding in the global city? Collect the full set!

2. It would also be interesting to hear more about the construction. A later part of the article mentions “super strong concrete” and new dampers but this is a sizable change from thicker skyscrapers of the past.

3. How do these buildings change the New York City skyline? Does their thinness present a different kind of image?

One new Miami building will “Be Home to Nearly 2 Percent of the World’s Billionaires”

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There are wealthy buildings and then there are ultra-wealthy buildings like this new condo tower in Miami:

Twenty-two billionaires—just shy of two percent of the world’s total—have purchased units in a condominium tower being built in Sunny Isles Beach, a small city in Miami-Dade County. The 60-story Porsche Design Tower features the normal super-rich perks, including units as large as 17,000 square feet, and swimming pool- and kitchen-equipped balconies as large as 1,600 square feet.

But the real draw is hinted at in the name: The Porsche Design Tower features three car elevators that will take residents and their rides directly to their units, where they can park their car in a glass garage adjoined to their residences (two-car garages for the “cheaper” units, four-car garages for the pricier ones). This feature allows car-obsessives to stare at their super expensive cars from their high-rise living rooms.

The tower, which broke ground in April 2013 and secured a massive construction loan in October, is the brainchild of car enthusiast and condo magnate Gil Dezer and Germany’s Porsche Design Group. As of mid-October, Dezer had sold almost 100 of the tower’s 132 units, the prices for which range from $4.2 million to $32 million. He reportedly spent part of November selling the remaining units at a gathering for Bugatti owners. There will be 284 robotic parking spaces in all. This is automated parking taken to the next level.

I know most of the buyers would rather not reveal that they live in this building but doesn’t this lift the profile of a new building?

The car elevator is pretty cool but I would also be interested in seeing how exactly this building interacts with the surrounding area. If you have this many wealthy residents, you don’t want normal people walking up or being anywhere near. Indeed, how could you construct entry and exit points so that people can’t simply wait for the wealthy to drive in and out? Leaving the transportation to cars leads to possible problems – and flying helicopters off the top of the building would help.

I can only imagine what the security will be here…

Describing the 20% of temporary rich (“mass affluent”) Americans

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New survey data looks at new rich Americans who draw a lot of attention from companies and who might have outsized political influence:

Fully 20 percent of U.S. adults become rich for parts of their lives, wielding outsize influence on America’s economy and politics. This little-known group may pose the biggest barrier to reducing the nation’s income inequality…

Made up largely of older professionals, working married couples and more educated singles, the new rich are those with household income of $250,000 or more at some point during their working lives. That puts them, if sometimes temporarily, in the top 2 percent of earners…

Companies increasingly are marketing to this rising demographic, fueling a surge of “mass luxury” products and services from premium Starbucks coffee and organic groceries to concierge medicine and VIP lanes at airports. Political parties are taking a renewed look at the up-for-grabs group, once solidly Republican…

In a country where poverty is at a record high, today’s new rich are notable for their sense of economic fragility. They’ve reached the top 2 percent, only to fall below it, in many cases. That makes them much more fiscally conservative than other Americans, polling suggests, and less likely to support public programs, such as food stamps or early public education, to help the disadvantaged…

As the fastest-growing group based on take-home pay, the new rich tend to enjoy better schools, employment and gated communities, making it easier to pass on their privilege to their children…

Sometimes referred to by marketers as the “mass affluent,” the new rich make up roughly 25 million U.S. households and account for nearly 40 percent of total U.S. consumer spending.

This sounds like a group that would call themselves upper middle-class: wealthy enough to enjoy some luxuries and good things for their kids but not wealthy enough to truly compete with the millionaires and CEOs. They resent the idea that they are rich as they think middle-class values, such as hard work and providing for their kids, helped them arrive at their current position.

Yet, when the median household income in the United States is around $50,000 it is hard not see this group as wealthy. To some degree, it is all relative: the mass affluent might not be able to consistently live the high life in Manhattan or San Francisco but they could do really well in cheaper places like the Midwest or Atlanta or Dallas. Perhaps it is the perceived fragility that matters most: losing their job might be enough to move them down back near the median income, though unemployment rates are much lower for the educated and well-trained.

A few questions after reading this article:

1. How big should this group be in the United States?

2. Long-term, which party will capture these voters?

3. Will this group get a lot of negative attention as they are more accessible than the ultra-wealthy who can live more cloistered lives?