Douglas Elliman rep: 70% of Brooklyn home sales going to hedge funds, investors and international buyers

Alan Dixon of Australian-based Dixon Advisory is leading investments in residential properties in the New York area.

This dude can’t even remember how many Bushwick properties
his Australian-based investment company bought

And this is why you can’t afford anything:

Standing in the dining room of the early 1900s-era brick rowhouse, deep in the Bushwick section of Brooklyn with not a frozen yogurt shop or Starbucks to be found, Alan Dixon, an investor from Australia, struggled to tally the houses he had bought in the area over the last year.

Alan Dixon of Australian-based Dixon Advisory is leading investments in residential properties in the New York area.
“What, 70? 72?” he asked, raising his eyebrows in question at a group of investors, contractors and designers standing nearby. A dozen construction workers scurried around, fastening plasterboard to walls and laying tile on floors, readying the four-bedroom house that the group purchased in June for $635,000 for leasing in less than two weeks’ time for as much as $5,490 a month.

Finally, someone locates the number on a piece of paper — 70, later corrected to 71. “That sounds right. Something like that,” Mr. Dixon said with a laugh, tugging on the cuff of the pink shirt he wore under his gray suit jacket.

It’s easy to understand why it might be difficult for Mr. Dixon to keep track. In just two years, the investment fund he oversees for Australian investors and retirees has purchased more than 538 homes, townhouses and brownstones from Jersey City to Queens and Brooklyn [...]

A handful of large private equity and real estate investment firms, including the Blackstone Group and Colony Capital, have bought billions of dollars’ worth of single-family homes in some of the areas most affected by the housing collapse.

The goal for these Wall Street investors is not to buy and flip the properties for a quick profit à la real estate bubble of the early 2000s. Instead, they are hunting for steady, dividend-like returns they believe can be earned by renting out the homes.

Where these investors see opportunity, however, their critics see opportunists. They say these types of investors, be they giants like Blackstone or smaller firms like Mr. Dixon’s, often come in waving wads of cash and crowd out first-time home buyers[..]

Some real estate agents say investors, more often than not, have been at the forefront of buying activity.

“I’d say by the spring, maybe 70 percent of the sales we were seeing were to hedge funds, investors and others taking advantage of what was happening in Brooklyn,” said Stephanie O’Brien, a real estate broker with Douglas Elliman in Brooklyn. “Only about 30 percent were actual end users or first-time buyers.”

Comments

  1. BillZCLinton says:

    Fucking dick.

    NY needs to seriously reconsider it’s real-estate laws and offer purchase opportunities to NY residents first.

    There should also be major hedge-fund and international buyer taxes that go into the community to off-set the disproportionate accumulation of wealth.

    • GoBackHomeAussie says:

      Totally fucking agree.

      • Fuckly Fucking Fuck!

        • fuckerty fuck fucking agree to!! if these hedge funds continue to buy homes and they will buy THOUSANDS!!! maybe millions! the younger generations are going to be completely screwed and made slaves to the rent collecting hedge funds. people underestimate just how powerful these hedge funds really are!

    • Joan Swarbrick says:

      I empathise with much of the sentiment expressed here, but two points.
      1. Australian investors (even individuals) are buying US property because its affordable compared to Oz, where less than 20% of new mortgages are to first-home buyers. Why? Because the Chinese are buying everything here.

      2.To help level the playing field the Australian government has passed legislation prohibiting foreign purchase of existing homes. The Chinese, and others, can now only buy off-the-plan new developments over $1mil. Not a complete solution but something like this could help in NY.

      3. It seems self-evident to me that until interest rates rise or the return on capital improves retirees will put hard-earned retirement funds into property as it MAY offer a better return. To brand all investors as ‘dirty capitalists’ is juvenile.

      Middle class Aussie retiree

    • Jeremy Hare says:

      Of course, by evil hedge funds you mean your own pension funds. Almost all “institutional investors” are acting on behalf of the pension funds that have invested in them.

      • Arun Gupta says:

        Of course, you are completely ignorant of finance. Hedge funds are usually private investors or owned directly by banks or brokerage firms. Few have significant amounts of pension fund money in them.

        And by the way, who has a pension fund these days? And just because something has $20K in a pension fund that puts a minute percentage in a hedge fund hardly makes them equivalent to a billionaire throwing hundreds of millions into the same fund.

        Your logic is the the capitalist equivalent of Archie Bunker’s “Love it or leave it.”

  2. Dirty greedy investors are destroying Brooklyn and forcing an exodus of the creative community. And while this is not exactly news, it hopefully will provoke a renewed conversation on the necessity of rent control.
    I wonder what will happen to the market when all of the people that have made this borough an interesting and inspiring place to live are gone?
    Dunkin Donuts.

    • You don’t need rent control. You need to make sure that when it comes to homeownership, those who own zero homes have a crack at bat before those who own 70 homes.

      • Oh there’s nothing to worry about. Prices will always revert to the mean. To believe that one can control prices over the long term is economic fantasy.

        How they revert is quite another story .. But if history is any guide it will begin with crime rising at an alarming rate. The great baby-boomer die off is also nearly at hand.

        Dickheads like this will lose their shirts as the tsunami of properties coming to market overwhelms them.

        Additionally, the creative class not only CAN leave New York, they WILL.

        There’s no edict from on high that says New York must forever be valuable real estate. Drive up the prices and the action will go elsewhere. Keep your shitboxes, mr. Hedgefund. There’s no shortage of space in this nation.

        The only thing that allows these guys to win in the short term is your unwillingness to move. But that exodus is mathematically inevitable — as is the collapse in value to the mean.

  3. Jennifer Avril says:

    Here’s a solution. Tag the buildings. Tag the former St. Vincent’s hospital property, the former Five Pointz and every property owned by this asshole. Let people know with graffiti and stamps who owns the place and how they are destroying New York’s middle and lower classes.

  4. He’s on the shitty landlord watch list. There’s an address for him here, too.

    http://pubadvocate.nyc.gov/landlord-watchlist/buildings

  5. Matthias Slavens says:

    This is upsetting on seventeen different levels.

  6. This is capitalism you greedy little pigs. No one will do a thing about it though as everyone’s 401k, pension, health care plan, etc are all tied into it.

    Sell you shares now and remove all of your cash from the bank and let’s start again?

    The ownership of private property should be limited to one home per person.

    • Bill Williams says:

      there are investment packages that are not “dirty.” look for the alternatives. at least until we get rid of wall street and eliminate corporations. power to the people.

  7. Bkmanhatman says:

    It’s disgusting that these investors are creating a class of indentured servitude. Something needs to be made to favor actual family or individual ownership not corporate entities – corporations are not persons

  8. Don’t worry guys, your savior De Blasio is going to make sure you all get affordable housing and his idea of affordable housing is charging his current tenants $2200 a month for his rental in Park Slope. Yes, that’s what he considers affordable, 2200 a month. $2200 a month buys you a huge house in most states! New York is gone and never coming back.

    • I Dont't know about that says:

      With world wide population growing and life getting more expensive I believe you are wrong. cities will become the choice of the future and they will grow – Tokyo is a mighty expensive place while Japan sat in a 20 year recession. Investors look for gold rushes and NY is a gold rush -the least expensive major city in the world. As we get older its ingrained to think it’s over – if you’re insular like the Mayan’s perhaps – but, no NY is not over no matter how much the whole thing looks like a Ponzi scheme.

  9. Timetowakeup says:

    Buying in NYC should be made easier for locals. For those of us who are honest, on time bill payers with excellent credit, who may not have ever had the lump sum to put a down payment on a place, but have been paying rent on time for decades, we need our new mayor, city council and city and state HUD departments to help us become landlords and homeowners. We’re the ones who toils away while people in various classes milk the systems and laws from top to bottom. We’re the ones who inhabited depressed crime ridden neighborhoods, started small businesses, made beautiful things happen and paved the wave for these sociopathic, vampiric developers. We moved in and honored the communities that were there before us and became part of the fabric. So, send some help our way. WE ARE THE ONES!

  10. Enjoy Your Democratic Feudalism says:

    RENT STRIKE.

  11. jjinbroklyn says:

    Unbelievable. I knew things were messed up around here for the locals, but I really had no idea of the depth of the problems. How is anyone in the working or middle class able to afford ownership in a neighborhood when you have foreign pockets as deep as this driving prices up.

    Imagine if some billionaire bought all the homes in this guy’s posh neighborhood in Australia, and then rented them out to him and his friends at exorbitant rates, putting ownership forever out of his reach. There ought to be a law, I tell ya…..

  12. There’s a great documentary about the forces behind “gentrification” in Brooklyn, surprising info for even well-informed folks. http://www.mybrooklynmovie.com/

  13. The bottom line is that these guys can only charge rents that people are willing to pay, and I have a feeling some of them are getting a little overexcited and will be left holding the bag. But as long as the daddies of the world don’t mind paying $1400/month for their little Lena Dunhams to have a room in an artsy loft share in Bushwick, that’s what landlords will charge, whether it’s Big Australian douchebag or little local douchebag.

  14. Geez, reactionary much? When investment opportunities present themselves, money flows from where it’s laying fallow to where it makes sense to invest. You’re bemoaning the fact that Brooklyn has become attractive to investors? You’re bemoaning change? Growth? As long as cities are confluences of free people acting with the freedom to pursue their own interests, they will grow, change, live. The only answer to that is stasis, the imposition of the state’s power over your liberty. These are the exact same arguments levied against folks who wanted to prevent desegregation. Change happens, people, it’s a function of life. Artists will continue to produce art, culture will continue to thrive. The extent to which you rail against change is indistinguishable from the all such reactionary sentiment. It’s quixotic and doomed to fail, unless we’re all prepared to cede our rights away (and even that, because we are people, will eventually fail).

    • jjinbroklyn says:

      We are bemoaning the fact that Brooklyn has become attractive to investors LIKE THESE. It has traditionally been attractive to NYC’s working/middle class, allowing families to be raised affordably close to jobs in Manhattan, with ownership within reach, and offering inexpensive opportunities to start small businesses, etc..
      Change is inevitable, of course, especially here where things change all the time. But this is much more than “change”. The subject of this article is symptomatic of a financial system run amok, where change can occur in an immediate, disruptive manner through the overwhelming infusions of capital, while those who actually live in the neighborhood see continual hardship (poor schools, medical care, infrastructure, low paying jobs, etc…)

      • i guess my gripe is that with the idea that somehow tradition should control/mean anything. Who cares who it was attractive to traditionally. Anyone who lives in the neighborhood lives in the neighborhood, and those are the people to whom the neighborhood belongs. This whole idea of preserving something is an decision to die. Change can, has, will continue to happen BOTH incrementally AND spasmodically. Continual hardship in brooklyn? The growth of the last 15 years in brooklyn has created far fewer hardships than benefits.

      • Who taught you the traditions? My parents came of age Brooklyn in the 50′s and 60′s, when it was mostly immigrants or offspring of immigrants. Getting out of Brooklyn was at the top of the list for anybody with any ambition. My dad finished college and they immediately moved to NJ and then CA. And it certainly wasn’t a sweet place in the 70s and 80s when crime spiked. Just because it got way safer and then more trendy for a newer, more urban friendly generation doesn’t mean you can revise history. Brooklyn was traditionally a place that you wanna leave! .

    • Don’t let Brooklyn go to your head. This is happening all over. Read this if you want to get a clue as to why you are getting priced out.

      http://www.zerohedge.com/news/2013-11-25/chart-day-how-chinas-stunning-15-trillion-new-liquidity-blew-bernankes-qe-out-water

    • Libertarians speak like space aliens.

  15. For 20 years I paid inflated NYC rents. Rent control/stabilization kept 70% of the market among family members and illegal sublets. Those who’ve been in the bar car the longest think they own the place and pass laws that mean they effectively do.

    But don’t forget, it’s the cheap money being handed out by the Fed to their cronies and owners — banks. Stop the Fed and property prices tumble as soon as the news gets out. How can a New Yorker compete with a business paying nothing for their capital?

  16. Priced_Out_NYC_Resident says:

    I hope all these “investors” will get their clocks cleaned just like in the 80s when the Japanese cornered the NYC CRE only to find them puking at the worse opportunity time.

    These greedy f*k*g bastards are ruining the lives and dreams of all the hardworking middle-income NYers. I have plenty of friends who are double-income, two-kids who can’t afford to buy a 2BRs, let alone a 3BRs! They are so F*K’ed.

    If this keeps going and as Wall Street continues to shrink, despite a record market, the only people who can afford to live here don’t even hold a US citizen! Thank you very much NYC! We’re BEYOND f*k’ed.

  17. The problem is capitalism, silly.

  18. What a bunch of f@&$ing cry babies… Never underestimate the predictability of stupidity…

    Welcome to reality …

    No-one is coming to save your community …

    There is no magic ‘make it all go back to how we liked it before’ switch… Is this guy the first asshole landlord in Crooklyn? Really… Is he the first to buy up properties as investments?

    There will come a time when property prices go down.. The returns get harder and the money goes elsewhere… And I bet London to a brick that the same whiners here will be spitting chips that the property they bought within the last couple of years has plummeted and life is terrible… Oh poor me…

    Welcome to average America ….

  19. Bruce MacKenzie says:

    Here’s an article which is along the same lines but goes into much greater detail:

    http://www.nakedcapitalism.com/2013/11/how-wall-street-has-turned-housing-into-a-dangerous-get-rich-quick-scheme-again.html

    It’s another economic disaster in the making.

  20. Rivegauch610 says:

    I would like to see the same fate befall repulsive beings like these as happened to the wealthy in Russia, ca. 1918…an “ethnic cleansing” of sorts. Merited.

  21. you americans (and English) have been snapping away the best country homes in Tuscany and the rest of Italy for years, inflating prices, and making it impossible for local to afford the,…..now you know how it feels….next time some frigid idiot writes “under the Tuscan Sun” or “A Room with the View”, don’t all rush to buy your piece of illusion.

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