Tag Archives: wealthy

Should millionaires and billionaires in the suburbs count when looking at the wealthiest cities in the world?

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A new list ranks the wealthiest cities in the world by the number of the wealthiest residents. Do the wealthy in suburbs count? For New York City, the top city on the list, they appear not to:

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The Big Apple is home to 345,600 millionaires, including 737 centi-millionaires (with wealth of USD 100 million or more) and 59 dollar billionaires. New York is the financial center of the USA and the wealthiest city in the world by several measures. It is also home to the world’s two largest stock exchanges by market cap (the Dow Jones and NASDAQ). Perhaps most notably, total private wealth held by the city’s residents exceeds USD 3 trillion — higher than the total private wealth held in most major G20 countries…

It should be noted that there are several affluent commuter towns located just outside New York City that also contain a large amount of top-tier wealth. Notables include: Greenwich, Great Neck, Sands Point and Old Westbury. If these towns were included in our New York City figures, then billionaire numbers in the combined city would exceed 120.

The San Francisco listing, #3, includes a broader set of communities:

The San Francisco Bay area — encompassing the city of San Francisco and Silicon Valley — is home to 276,400 millionaires, including 623 centi-millionaires and 62 billionaires. Home to a large number of tech billionaires, Silicon Valley includes affluent towns such as Atherton and Los Altos Hills. This area has been steadily moving up the list of millionaire hubs over the past decade and we expect it to reach the top spot by 2040.

Los Angeles, #6, also includes suburbs:

This area is home to 192,400 resident millionaires, with 393 centi-millionaires and 34 billionaires. Our figures for this area include wealth held in the city of Los Angeles, as well as nearby Malibu, Beverly Hills, Laguna Beach, Newport Beach, and Santa Monica. Key industries include entertainment, IT, retail, and transport.

And the methodology suggests there are six cities on the list where the city is defined more broadly.

There could be a variety of reasons for looking at wealthy residents just in cities or also including metropolitan regions. Depending on setting these different boundaries, how much might it change the rankings?

Good for preserving suburban green space…but is it also contributing to inequality?

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A group in the northwest suburbs of Chicago announced an agreement to buy and preserve nearly 250 acres of land:

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In a watershed moment for suburban land preservation efforts, a Barrington-based conservation group announced Monday it is buying the Richard Duchossois family’s 246.5-acre Hill ‘N Dale Farm South, long considered one of the most important and desirable tracts of open space in northern Illinois.

Citizens for Conservation’s acquisition of the land near Barrington Hills will ensure it remains protected open space and provide a critical wildlife corridor with the 4,000-acre Spring Creek Forest Preserve next door…

All told, the acquisition and restoration carries an estimated $10 million price tag, according to the organization. Citizens for Conservation received nearly half that through a $4.9 million grant from the Illinois Clean Energy Community Foundation, the largest such grant awarded for a single-parcel purchase…

Although not within Barrington Hills’ corporate limits, the property is surrounded by the village. Village President Brian Cecola was enthused by Citizens for Conservation’s acquisition of the land.

“Citizens for Conservation’s dedication to land preservation aligns with our village’s objectives of preserving open spaces and maintaining our 5-acre zoning. It’s a win-win for everyone involved,” he said.

With all of the concerns about land use and environmental degradation due to suburban sprawl, isn’t preserving space for animals, plants, and nature a win?

Here is another possible way to read this: the purchase of this land continues patterns of uneven development and inequality in metropolitan regions. How this might happen:

-Who has this kind of money to purchase the land? In this particular case, a non-profit secured a sizable grant – not an easy task in itself – and found other money. This group purchased and maintains property on its own and has contributed to Forest Preserve acquisitions.

-This green space is in a wealthier suburban setting. According to 2020 Census data, Barrington Hills has a median household income of over $157,000.

-As described above, Barrington Hills has a guideline involving 5-acre zoning. Such zoning practices mean properties are larger and both the land and housing is more expensive. This limits who can live in the community.

Hopefully, there is some consideration given to who benefits from using this green space and how all people in metropolitan regions could benefit from proximity to and access to nature and green spaces.

What will be the first “city of the future”?

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Multiple efforts are underway around the globe to construct new kinds of cities. Here is an overview of some of this work:

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Telosa is set to be built on 150,000 acres in either Nevada, Utah or Arizona, and 50,000 “diverse” people will call it home by 2030, according to newly released details from Lore — a serial entrepreneur who sold Jet.com to Walmart for $3.3 billion and the parent company of Diapers.com to Amazon for $545 million.

“We’re not just building a new city — this is a new model for society,” Lore said at a Telosa “town hall meeting” in July, adding that he wants his new city to be “sustainable and equitable to all.”

It’ll be governed by a principle he calls “equitism,” which seems to be a mashup of democracy, capitalism and socialism…

Floating City in the Maldives is envisioned as a large cluster of hexagonal structures that rise and fall with the sea, with room for up to 20,000 people. It’s set to be completed in 2027

Toyota Woven City is a company town being built in the foothills of Japan’s Mount Fuji. The proposal calls for a 2,000-person city where Toyota “will test autonomous vehicles, smart technology and robot-assisted living,” per CNN.

Masdar City in Abu Dhabi is a “master-planned eco-complex designed to show off the UAE’s commitment to sustainability,” Bloomberg has reported.

Net City in Shenzhen, China, is another company town being built by tech giant Tencent. It’ll be a Monaco-size metropolis for 80,000 workers, CNN reports.

Several other projects are briefly mentioned in the article. Across all of these proposed communities, there are several patterns:

  1. Created by the ultra-wealthy or corporations.
  2. Incorporating sustainability or new technology.
  3. A limited population.

It strikes me that we now have a good sense of what megacities are around the world: they have a certain population and share common traits regarding land use, economics, and social life. Such cities are relatively new in human history but now they are common. So then what exactly needs to be different for a new community to be a futuristic city? A different aesthetic? No cars or limited cars? Much greener? Smaller in scale? Different social arrangements?

Owning and selling over $1 billion in art

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The art collection of Paul Allen will soon go to auction with the proceeds going to charities:

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In a statement, Christie’s said that the famed auction house will sell off more than 150 ‘masterpieces’ belonging to Allen’s foundation. The collection spans over 500 years of art history while the value of the works is more than $1 billion. The auction is titled: ‘Visionary: The Paul G. Allen Collection.’ The proceeds will be divided up among various charities.

Among the artists’ whose work is featured in Allen’s collection include Paul Cezanne, Jasper Johns, David Hockney, Edward Hopper, Pierre-Auguste Renoir, Georgia O’Keefe, Paul Gauguin, Roy Lichtenstein and Claude Monet. Following Allen’s death, it was revealed that he was the anonymous buyer of Monet’s haystacks painting titled Meule in 2016. The painting sold for $81.4 million.

Because I am teaching a class titled Culture, Media, and Society this semester, a sociology of culture course, this news caught my attention for several reasons:

  • The amount of wealth concentrated in a set of created objects is fascinating to consider. This is considered a good investment for those with the means:

In the aftermath of the Covid-19 pandemic, the art world continues to see major gains. According to a UBS study, the art market generated over $65 billion in 2021 alone. The US art market made up 43 percent of the value share. 

  • This is a reminder of the amount of wealth – and presumably networking – involved in the major art markets. People with fewer resources can see major works in museums or galleries but the owners of such works are in different social categories and circles.
  • Living with such work that is considered important and/or expensive must be interesting:

In 2015, he told Bloomberg: ‘To live with these pieces of art is truly amazing. I feel that you should share some of the works to give the public a chance to see them.’ Allen said in the same interview that his art collection was a ‘very, very good investment for me.’

  • How does someone become invested – economically, socially, personally – in art? According to Allen:

It was a visit to London’s Tate Gallery that exposed him to classical works by J.M.W Turner as well as the pop art of Roy Lichtenstein. That visit left Allen ‘profoundly moved.’ The bio continues by saying: ‘That experience ignited within him a passion for art — and for making art accessible to more people.’

As we consider culture as “processes of meaning-making” (definition from sociologist Lyn Spillman), there is a lot of meaning-making in Allen’s milieu, actions, and legacy.

The bland interiors that pushes viewers to choose gaudy McMansions instead

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A review of a renovation TV show suggests it is more fun to see McMansion than bland interiors:

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But like any good home design show, the real main character is not the couple doing the renovations, but the end results. For the two years that I’ve watched this program, I’ve tried to dial down what one might call this aesthetic, which is both specific and generic—like every other high-end Airbnb listing on the market, or an antiseptic boutique hotel that prides itself on design. But it wasn’t until halfway through this season when one of the McGee’s clients hit the nail on the head. “It’s upscale-looking,” a woman says of her newly-renovated basement, which is divided into three clear “zones” meant to delineate what kinds of leisure activities should occur there and why. It’s not quite upscale, but suggestive of it instead, a different kind of new money aesthetic. But if given the choice between Studio McGee’s all-white fantasia and a giant McMansion fit for a Real Housewife of New Jersey, I’d take gold restroom fixtures and Travertine tile any day. At the very least, it’s fun.

What is the look inferior to glitzy McMansions?

What this translates to is large architectural gestures that convey wealth—vaulted ceilings in the kitchen and the living room, a “wine room” with built-in bookshelves that meet the ceiling, and other flourishes that speak to the vast amounts of money this couple must have to maintain their bonus home. It’s not that any of these design choices are anywhere close to hideous, per se—Studio McGee’s signature look is quieter than the Property Brothers, but more sophisticated that Chip and Joanna Gaines’s farmhouse chic. Staged as they are, though, the spaces designed by Studio McGee lack any discernible personality. Children get giant bedrooms with queen-size beds; every kitchen has an enormous island, whether or not the space actually needs it. (While most kitchens could use an island, not every space needs one. Understanding this difference is crucial.)

Is the primary offense that the bland yet wealthy interiors required a lot of money to implement but have no personality? McMansions are often criticized for their blandness; they are big boxes with large rooms that people can fill in many different ways.

It could be that the “fun” of the loud McMansion is that it shows up better on TV and with its particular cast of characters. The show under review is meant to show off a particular aesthetic of its designers while the Real Housewives of New Jersey has a different purpose. The loud McMansion on TV might be fun in the way that McMansion Hell is fun: you make fun of the McMansion and its dwellers. Which home viewers might want to live in might be a different story.

It cannot be a McMansion if it is valued at over $30 million and has mansion features

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Actor Chris Hemsworth has turned a big home into an even bigger and more luxurious home in recent years. Is it a McMansion?

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After buying his Byron Bay family home for $7million back in 2014, Chris, 37, transformed the sprawling property into a compound that has been valued at between $30million and $60million.

The actor carried out extensive renovations on the six-bedroom home, and it now boasts a steam room, gym, media room and games room.

There’s also a stunning outdoor living area, play areas for his three young kids and a 50-metre rooftop infinity pool, which overlooks the ocean…

Angry neighbours were quick to say the rebuild reminded them of a suburban shopping centre, a refurbished RSL club or a regional airport terminal.

Others compared the home, which sits on 4.2 hectares, to a multi-storey car park and a ‘McMansion’.

While there is no mention of the square footage of the home, this description suggests this home is a mansion. Here are several reasons why: it likely has more space that a spacious McMansion (imagine 3,000-6,000 square feet there); it is not a mass-produced, cookie cutter home; it has numerous luxury features; it is not owned or renovated by a regular wealthy person but rather a global film star.

So why would a neighbor call it a McMansion instead of a mansion? I would guess that this was done to link the home to a pejorative term and to critique the architectural style of the home. A “mansion” could still be critiqued but the negative connotations are implied in McMansion. The other descriptions by neighbors have to do with the architectural style of the home, whether they are viewed as ugly or not consistent with the surroundings.

Is there a lesson in this? Here is one option: to fight the big home in the neighborhood, call it a McMansion. Label it a mansion and it might just justify the size, features, and architecture.

The suburbia where those who work from home have money to spend nearby

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If more suburbanites are working from home and spending more time in the suburbs, suburban communities and businesses want their money:

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Suburban developers and retailers are working to provide ways to escape home, be around others, and, most importantly, spend newfound time and money…

Neighborhood retailers are eyeing the money she and others are saving on the commute, in addition to the thousands of dollars that office workers typically spend annually in restaurants, bars, clothing stores, entertainment venues and other businesses. In many cases, coffee breaks, haircuts and happy hours that used to happen near downtown offices have moved to the suburbs…

In the Washington region and nationally, the trend is most striking in higher-income inner suburbs, where more residents have computer-centric jobs suited to remote work and money to spare…

The new weekday demand, developers say, has helped suburban shopping centers and entertainment districts reach and, in some cases, surpass 2019 sales. The pandemic also accelerated long-standing pre-pandemic trends toward walkable suburban developments and the “third place” — public gathering spots like coffee shops and bookstores, where people can connect beyond home and work.

I want to expand on one of the ideas suggested above: this may already be happening in wealthier and denser inner-ring suburbs. These communities already have residents with more money to spend and already have a denser streetscape from a founding before postwar automobile suburbia.

But, could this go further? Suburbanites with more money to spend live in certain places. The shopping malls that will survive and even thrive are likely located near wealthier communities. Having more resources could enable certain suburbs to redevelop and add to their offerings compared to others that could languish in a competition for spenders and visitors.

Imagine then an even more bifurcated suburbia where wealthier suburbs have vibrant entertainment and shopping options while other suburbs do not. The suburban work from home crowd is not evenly distributed and neither are the communities and amenities they might prefer.

Separating McMansions from luxury homes

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What is the difference between a McMansion and a luxury home? Here is one viewpoint:

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So, what exactly is a luxury home, Michael, you ask? Some people classify it by the style of the house, or perhaps by its finishes, or by the product brands in the home. So, how do we define a luxury home from a price standpoint? I know different brokerages and different real estate firms define luxury real estate differently. Many define a “luxury home” as a property that is priced at $1,000,000 or higher.  For the purposes of this article, we’re going to define a luxury home as a home that is listed for sale at at least three times the average sales price for that market. (There are four primary price points in most markets: starter-/entry-level, average, high-end and luxury pricing. I define high-end homes as homes that are two times the average sales price for that given area.)

Luxury is relative to that specific market. Most markets have luxury homes based on our definition; it’s all relative, however, because when people think of luxury, they often think of McMansions or estate homes, and that’s not always the case. To take action, you need to develop graphs and other visuals that can articulate the data for luxury and high-end real estate for/in your marketplace: Are you in a buyer’s market or a seller’s market? High-end and luxury homes start at what price point for your market?

I am interested in the ways the dimensions of a luxury home are different than those of McMansions. This is based on my four traits of McMansions.

  1. The absolute square feet of the home is not mentioned above. Presumably, both McMansions and luxury homes are large.
  2. The relative square footage is also not mentioned above. Perhaps luxury homes are generally larger than McMansions?
  3. The architecture and design is mentioned as luxury homes may have particular features and/or finishes. While McMansions are often criticized for mass produced features and/or poor architectural choices, luxury homes stand apart from this.
  4. The luxury home is more expensive, whether over $1,000,000 in price or some multiplier above the market or in a tier above others. McMansions are more expensive than small homes or starter homes but they are not as pricey as luxury homes. The luxury home is then a true luxury good available only to a few while McMansions are meant to appeal to a broader audience.

If the description above is correct, luxury homes are mostly different because of their price at the top end of the market. McMansions are not that; they may aspire to be luxury homes but they are for a different price point and have different features that have less to do with square feet and more to do with design elements or features.

(The next step might then be to provide advice for real estate agents and others who want to appeal to McMansion buyers and owners. How to stay away from luxury home territory and above more typical homes?)

Declaring a mountain lion sanctuary and other NIMBY efforts

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Wealthier communities have a variety of means by which to oppose or block cheaper housing or affordable housing. This can include emphasizing conservation in a Silicon Valley community:

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“Woodside declared its entire suburban town a mountain lion sanctuary in a deliberate and transparent attempt to avoid complying with SB 9,” California Attorney General Rob Bonta wrote in a letter to notify the town that the move violates state law and must be amended.

After receiving a letter from the attorney general this weekend that threatened further legal action, the town ended its short jaunt into the world of conservation the next day. In a statement on Monday, the council said that the Department of Fish and Wildlife “had advised that the entire Town of Woodside cannot be considered habitat” and that “as such, the Town Council has instructed staff to immediately begin accepting SB 9 applications.”

Woodside is not alone in recent efforts:

Woodside is far from the only town that has attempted to come up with creative ways to block the statewide rezoning law. Since its introduction last year, local governments and homeowner groups have opposed the plan, claiming that it crushes single-family zoning.

There have been at least 40 cases in which towns attempted to block or limit SB 9 housing, according to affordable housing advocacy group Yes in My Back Yard Law.

I would not expect wealthier communities to just go along with new guidelines. The combination of local government authority over zoning plus wealth means that certain communities can delay and/or fight affordable housing or more housing. Or, state legislation or federal guidelines are written in such a way that communities escape scrutiny or any penalties (see the example of Illinois). Is the situation different now in California such that communities will not be able to delay any longer?

More broadly, how much do efforts to conserve open space in suburban areas really take place to protect wildlife and land versus limiting the amount of development? From my research in the Chicago suburbs, I recall numerous efforts to protect open land and expand Forest Preserves. These often occurred during mass suburbanization in the postwar area as open space quickly disappeared among new subdivisions and roads. Open space can help limit the number of nearby residences, reduce noise and traffic, and boost property values by limiting housing supply.

Just how many compounds, mansions, and luxury condos does a billionaire need?

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Jeff Bezos owns multiple expensive properties:

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When Jeff Bezos isn’t launching himself into space, he’s on the hunt for another trophy property to add to his already-impressive real estate portfolio. Earlier this year, the Amazon founder reportedly acquired a 14-acre compound in Hawaii for a whopping $78 million in a mysterious deal (more on that later) which brought the value of his real estate holdings to an astronomical $578 million, if not more. The billionaire has picked up several properties in his home state of Washington, a number of New York City apartments, a few sprawling estates in California, a ranch in Texas, and a number of places in Washington, D.C. Below, we’ve rounded up all of the homes the entrepreneur owns in the U.S.—so far…

Several years after Bezos founded Amazon, he put down $10 million for what has largely been his primary residence over the past few decades. It comprises two homes measuring 20,600 square feet and 8,300 square feet, respectively, situated on about 5.3 acres in the exclusive Medina neighborhood of Seattle (Bill Gates also owns a home there). In 2010, the Albuquerque native invested $28 million to renovate the property. That same year, Bezos reportedly bought the property next door, a 24,000-square-foot house that came with an additional five acres. The Tudor–style home was listed for $53 million at the time, but it is unclear what the billionaire ended up paying for the purchase. Bezos still owns this massive compound…

Bezos made a big move to Washington, D.C. in late 2016, snapping up two sprawling mansions measuring a combined 27,000 square feet for $23 million. Built in 1914, one of the massive homes was previously the site of the Textile Museum and was recorded as one of the largest houses in all of D.C. According to The Washington Post, which Bezos owns, the billionaire purchased the property with plans to convert the two adjacent structures into one single family home so that the Bezos family could use it during their visits to the city. It is located in the Kalorama neighborhood, which has also been home to the Obamas, Ivanka Trump, and Jared Kushner. In 2018, it was reported that Bezos was planning a $12-million renovation on the place, including the addition of a garden room to one of the two structures…

The next year, Bezos expanded his Beverly Hills compound with the purchase of the $12.9-million home next door to the Spanish-style mansion he’d bought in 2007. While details of the house are scant, the Los Angeles Times reports that the structure measures 4,586 square feet, with four bedrooms and six full bathrooms. The property features a gated semi-circular drive and a picturesque swimming pool shaded by mature trees…

In April, Bezos bought a fourth unit in the luxe Madison Square Park apartment building where he’d snapped up three homes the previous summer, dropping $16 million for a three-bedroom unit adjacent to the two lower-level units from the original purchase. Although it was unclear at the time what Bezos’s plans were for combining all four units, building permits were submitted in fall 2019, so it’s likely the fourth acquisition was meant to be an addendum to the already-grand Manhattan mega-mansion.

Real estate can serve multiple purposes for the wealthy. They need multiple places, homes near work, in important cities, and in getaway locations, to keep their wealthy lifestyle going and to keep their daily activity out of the public eye. These properties can be investments as the number of such units is limited. Finally, these holdings are status symbols in themselves as they require money, staff, and attention that few individuals could provide.

The implication here is that Bezos has spent a lot on all of his properties. Given his wealth, maybe not. What I would be more interested in is how his holdings compare to other billionaires. What is the average number of expensive properties? Are mansions, urban luxury locations, resort properties, or rural holdings more common? How do these big actors affect real estate activity in different locations? Deeper study of the real estate activity of the most wealthy could help us better understand how wealth translates into real estate capital.