Topline: As New York City’s coronavirus cases exploded in recent weeks, residents fleeing to second homes have come under intense scrutiny and push-back, prompting officials in multiple states to create highway checkpoints screening for New Yorkers and a national travel advisory for the entire Tri-state area, highlighting the dramatic roles class and wealth will play in the pandemic.
With over 56,000 coronavirus cases in New York, privileged New Yorkers with secondary homes are fleeing the City with massive effect on vacation home communities: the population of Southampton has gone from 60,000 a few weeks ago to 100,000 and rental prices in Hudson Valley rocketed from $4,000 to $18,000 per month—posing a threat to small-town hospitals that are ill-equipped to handle caring for high numbers of coronavirus patients.
In wealthy New England island communities like Nantucket, Martha’s Vineyard and Block Island that are heavy with secondary homes and short on hospital infrastructure, officials are going so far as to cancel all hotel, Airbnb and VRBO reservations while stationing state troopers and the National Guard to maintain flow on islands and, in the case of Rhode Island, instating 14 day mandatory quarantine on all people traveling to stay in the state from New York, New Jersey or Connecticut.
As outrage has grown at the privileged fleeing the city while middle and working classes remain confined in New York City apartments, there’s been social media clapback at ostentatious displays of wealth in isolation: Geffen Records and Dreamworks Billionaire David Geffen ultimately deleted his Instagram of his $570 million megayacht captioned: “Sunset last night..isolated in the Grenadines avoiding the virus. I’m hoping everybody is staying safe” after it sparked outrage on social media.
New York City’s poorer boroughs are hit hardest by coronavirus: Brooklyn and Queens, where median income is $56,015 and $64,987, respectively, remain the epicenter of COVID-19, compared to Manhattan with average income of $82,459, which has been less permeated by the virus and is home to many of Manhattan’s wealthiest enclaves—and those most likely to have residents with second homes elsewhere.
On Saturday, President Trump said he was considering quarantining parts of New York, New Jersey and Connecticut, then, backed down and issued a domestic travel advisory for the tristate area that discourages residents of these states from non-essential domestic travel after “very intensive discussions” at the White House on Saturday night, said Dr. Anthony Fauci on CNN today: “The better way to do this would be an advisory as opposed to a very strict quarantine, and the President agreed.”
“Due to our very limited health care infrastructure, please do not visit us now,” reads a travel advisory from Lake Superior’s Cook County in Michigan, exemplifying vacation towns’ plea to travelers and second home owners across the country to stay away.
Background: Coronavirus cases in the United States have skyrocketed to 124,000, with deaths doubling from 1,000 to 2,046 in two days. Since those with COVID-19 can be asymptomatic for days, their presence in remote communities may be deadly, as they can spread the virus and wreak havoc on rural hospitals. The clash between wealthy and poor, also creates state-versus-state hostility, as federal support is limited and essential to states overcoming coronavirus.
I’m the assistant editor for Under 30. Previously, I directed marketing at a mobile app startup. I’ve also worked at The New York Times and New York Observer. I attended the University of Pennsylvania where I studied English and creative writing
In 2005, when I first began living in China, rent was incredibly low—as in, $100 per month for a two bedroom apartment near Zhejiang University in Hangzhou. This wasn’t just due to the fact that everything was cheaper back then or a lack of adjusting for inflation, but relative to the general price points of other goods and services, rent in China was startlingly cheap. There was simply a lack of demand for rental properties and it would have been a stretch to even call the rental market nascent–it hardly even existed. While manual migrant workers were renting out bunks in dormitories and rooms in suburban villages, the movement of educated, white collar workers to China’s big cities had yet to shift into high gear, there was an absolute glut of new housing being brought onto the market, and the cost of purchasing a home was relatively affordable–not to mention the fact that there was an acute amount of social pressure to own a home and having to rent was almost pitiable.
Today, the housing scene in China is very different. With a sizable portion of the population priced out of the market in key areas as well as a population that has grown accustom to being geographically agile and moving from city to city for the best opportunities, renting has started to lose its taboo status—and there are even signs of it starting to be seen as modern, fiscally strategic, and perhaps even a little chic.
In many parts of China, the housing market has topped out and stabilized, the construction boom has been curbed, and there is a growing suspicion among the young generation that going into long-term debt to pay an overinflated price for a house that statistically will be ready to demolition around the same time they have it paid off may not be the best of life decisions. Renting is now a viable option for China’s younger generation and has become an industry that’s now set to boom.
When we discuss China’s real estate boom period (circa 2005-2016) we have to keep in mind that home ownership was still a relatively new phenomenon. In a rather under-appreciated economic revolution, China’s real estate market was reborn in 1998, when the central government began breaking up workers units and privatizing housing. During this period, people were suddenly given the right to sell or rent out their homes, and China obtained one of the highest rates of home ownership in the world. But, as with most things in China, there was a deeper story behind the numbers, as in this era people were basically given their homes for extremely low prices.
“For my parent’s generation, they don’t even think about renting,” Cody Chao, a 20-something medical student from Suzhou, explained. “Besides, housing wasn’t that much of a financial issue. I know my dad got the place that I’m at right now at a very reasonable price—like, a crazy cheap price.”
However, these new economic privileges–not to mention a building boom unlike anything the world has seen before–set the stage for China’s well documented real estate feeding frenzy of the early 2010s. New social expectations were put in motion: in order to be considered viable for marriage a young couple would need to be able to lay claim to their own home. This pressure meant that upwards of 30% of new home purchases in China were being carried out due to an impending marriage—or, as was so often the case, parents buying a home for their child’s future marriage. According to Mark Tanner, the director of the Shanghai-based consumer research firm China Skinny, around 90% of Chinese first-time home buyers are supported by their families.
The Real Reasons The Chinese Love Throwing Money Into The Housing Market
ForbesWade Shepard“It’s like part of the wedding deal,” Chao explained. “You get a house and then you start your own family. Once you have a house, a decent car, an okay job, then we can sit down, get a latte at Starbucks, and see what you are as a person. It’s more of a trade rather than a romance.”
Crazy cost of housing
Massive skyscraper windows.
Getty
However, this “wedding trade” is now feeling the ripples of financial reality, as the cost of housing in China’s economic epicenters is making some people accept long-term renting as a viable option.
“Housing affordability versus salary in China is the most out of whack in the world,” Tanner pointed out, “and almost all salary earners would struggle to buy a house with their wages, which is making more young Chinese who want to stay in the big cities realize that they are unlikely to ever buy a house there. Some will buy a home in their home town, and rent in the big city.”
How People In China Afford Their Outrageously Expensive Homes
ForbesWade ShepardProperty prices in China have become some of the most expensive in the world, having more than quadrupled since 2000. By early 2018, the average price-to-income ratio for a house in one of China’s top cities was a startling 34.9 years—meaning that it would take nearly 35 years of an average salary to pay for an average home. Even while China’s middle class continues to grow, the rising cost of housing has doubled that of disposable income. Compounding this issues is that not only are housing prices rising to unaffordable heights, but larger down payments are being required and mortgage interest rates are going up, making buying a home seem more and more like a far off dream for the average Chinese millennial.
Meanwhile, rent is still very affordable. For example, as of June 2018, the average monthly cost of a mortgage in China’s top cities was 16,000 yuan per month, while the average rent was less than half that at 7,000 yuan, according to a JLL report.
The rationale is now sinking in that for many of China’s younger generation buying a house prior to marriage may actually be fiscally irresponsible, and “nude weddings”—where neither party owns a home—are not only becoming more common but are starting to seem like a good idea.
“For any new family to buy property is impossible for someone who has just started their career. It’s just impossible,” Chao lamented. “Like, a house in Pudong will cost whatever I’m going to make for the rest of my life.”
To make matters even more difficult for China’s prospective young home buyers is that in most of China’s first- and second-tier cities there are strict home purchasing restrictions. These were originally designed to curb the ongoing mass migration to the country’s economic epicenters as well as to provide local governments with a more robust set of levers to control the housing market and stave off the very real possibility of bubbles and crashes. The impact on the ground is that if you’re from, say, Chengdu, and you move to Shanghai for work, you can’t just jump right in and buy a house like you can in the U.S. or Europe. You must first be able to show a lengthy (currently 5 years) work and tax paying record in the city before you are permitted to enter the housing market–regardless if you can afford it or not. Therefore, migrants to China’s top-tier cities must endure what amounts to an extended period of rental purgatory before they can even think about becoming a homeowner.
What Bubble? How China Stays In Control Of Its Wild Housing Market
ForbesWade Shepard“If you look at a city like Shanghai, for example, of the 25 million population, just 11 million living there are Shanghainese, who own the vast majority of the residential real estate,” Tanner explained. “You’ve now got domestic migrants who have been living there 10+ years who have made their life there and are wanting to stay for both job opportunities and the general excitement of the cities.”
The new generation
Housing in China.
Getty
China currently has around 400 million millennials who are entering the country’s labor and housing markets with a different set of life experiences and outlooks than their parents and grandparents. China’s young generation, the first to grow up into a relatively prosperous country, also face a different set of fiscal realities than their predecessors.
“I grew up free of worry of being starved, of being cold, of being without a home,” Chao explained.
China’s young and educated generation is typically geographically mobile, many have studied or worked abroad, and have become comfortable living and working in a city far from where they grew up. Millennials make up 43% of China’s urban migrants, according to a Chinese government survey. These new migrants often grew up in urban areas, were educated in urban areas, and now want to seize the opportunities of some of China’s most prosperous cities, and are growing more and more comfortable with renting as they do so.
Another social factor that’s impacting China’s rental market is that the millennial generation is getting married and having children later in life. According to China’s National Bureau of Statistics, the average age for a couple to get married and have a child in 1991 was 23.7 and 24.2 years, respectively. Last year, the average age to marry was 27.8 years old and the average age to have a child was nearly 30. JLL found that this delay in family planning has delayed home purchases, with more young Chinese willing to rent for a far longer duration of time than their predecessors.
The rise of renting
Typical urban housing in China.
Getty
Over 200 million people in China are now renting their homes, and this may just be the beginning of a sector that’s going to explode in the coming years. While China’s rental market is currently valued by Jones Lang LaSalle at more than one trillion yuan ($140 billion), renting still only makes up a mere 2% of the housing market.
The Chinese government is very aware of the economic potential and the social necessity of the rental market, and in 2017 launched a new initiative pragmatically dubbed “Focus on Both the Rental and Sales Housing Markets,” which set out to develop the country’s fledgling rental sector. A wave of policies were unleashed to build more rental properties and to provide incentives, such as tax breaks, for property owners who rent out their unused homes as well as renters themselves. Beijing, for example, announced in 2017 that a third of the new housing units that would come online over the next five years would solely be for renters. Meanwhile, in the eastern city of Wuxi, the local government decided to permit renters to apply for residency, which would give them access to the city’s education, health, and other social services—previously, they had to own a home of at least 60 square meters.
The stage is now set for China to create a dynamic rental market, and the country’s big companies have likewise responded. Tech giants like Alibaba, Tencent, and JD.com are making big investments in the rental sector, as are major real estate developers like Country Garden, Vanke, and Dalian Wanda. Apartment booking apps are also popping up and attracting large amounts of investment. Ziroom, for example, is China’s equivalent of Airbnb with a twist, as they predominately deal in long-term rentals. Last January, they brought in $621 million in financing, with backing from Tencent, Warburg Pincus, Sequoia Capital, and Sunac, and is now valued in the ballpark of $3 billion. By 2030, China’s rental market is expected to quadruple in value to 4.2 trillion yuan ($588 billion), as the country braces for a new economic sector to boom.
I’m a perpetually traveling writer who focuses on new cities (ghost cities), the New Silk Road, and international e-commerce as seen from the ground. I am the author of “Ghost Cities of China: The Story of Cities Without People in the World’s Most Populated Country,” a book which chronicles the two and a half years I spent in China’s under-populated new cities. For the past three years I have been traveling up and down the various corridors of the ‘New Silk Road’ or Belt and Road doing research for a book which should be out in 2018. I have been featured in, interviewed by, or appeared on CNBC Squawk Box, CBC The Current, Forbes.com, VICE, NPR Morning Edition, and BBC World
The data comes from an annual survey of residential purchases from international buyers, which found that foreign buyers, led by the Chinese, purchased existing properties with a total value of $77.9 billion from April 2018 through March 2019, compared to properties totaling $121 billion in the preceding 12 months.
Investors from China exited the market most dramatically, with purchases falling 56% to an estimated $13.4 billion worth of residential property.
There are many reasons for the plunge, including less economic growth abroad — growth slowed to 3.6% in 2018 and is on track to slow to 3.3% in 2019 — tighter controls on outside investment by the Chinese government, a stronger U.S. dollar and a low inventory of homes for sale, according to Lawrence Yun, NAR’s chief economist and fellow Forbes.com contributor, who called the magnitude of the decline “quite striking, implying less confidence in owning a property in the U.S.”
Most foreign purchases were in Florida, followed by California, Texas, Arizona, North Carolina and Illinois.
While this is bad news for the overall U.S. market, it won’t make a crucial dent in the New York market, as foreign investment hasn’t been part of the market for some time, those in the industry say.
“The reality of it is the Chinese billionaire or Russian oligarch were a small fraction of the market,” Steinberg says. “Your best foreign buyers are American buyers—just from other parts of the country.”
Svetlana Choi, a broker with Warburg Realty, said there is still foreign investment in New York, just not for ultra-luxury properties.
“While there are still Chinese investing, they would prefer to invest in an apartment building in Flushing that can bring a far larger return, than an empty super expensive apartment in New York City,” Choi says.
Noemi Bitterman, also of Warburg Realty, notes that as the market continues to decline, more investors may come through.
“My feeling is that now is definitely a time to buy because current prices reflect fair market value and not inflated prices as we saw six to 12 months ago,” Bitterman says. “The market has adjusted and prices are where they should be.”
A new luxury residential resort is being developed on the Turks & Caicos. Rock House, created by Grace Bay Resorts, will be a Caribbean version of a Mediterranean retreat overlooking the ocean. Rock House which will break ground later this year, is now offering a select number of homes for purchase. The resort will officially open to guests in 2020. Located on a majestic 14-acre oceanfront site with 600 feet of frontage and peaks soaring up to 95 feet above sea level, Rock House is the first residential resort tucked into the rugged, untouched limestone cliffs of Providenciales’ north shore……..
With the real estate market still in a slump, more and more people have decided not to sell their home. Instead, they have chosen to stay put, until things get better. I count myself in this group; I had my own home on the market for two years. My house sold, and the sale fell through, on two separate occasions. As a result, I’ve resolved to stay put until the real estate market improves.However, now that I’ve decided to stay in this home instead of moving, I plan to make several home improvements to make my home more comfortable (e.g. building a sunroom to combat the dreary Michigan winters, and building a backyard deck)…..
Making a profit is the primary reason that most businesses are started. Nobody goes into business with the goal of losing money. Once you have committed to starting a business a large portion of your mental energy will be spent on trying to find ways to increase its profitability. Depending on the type of business in question, there may be various marketing methods that work better to spread the word and make potential customers aware of your offering.
While growing your business is the most obvious way to generate greater profits, there are other means to give your business a better chance of being successful. In the restaurant business, there are a number of ways that you can control costs through your purchasing decisions. Searching for better deals on locally grown produce and constantly comparing distributors for the best prices can help minimize costs and increase your profit margin. Finding a used food trailer or food truck for sale can save you a lot of cash when you are looking to expand your business outreach.
Restaurants use a lot of different kinds of equipment to serve their customers. Some of this equipment is visible to the clientele and some is out of sight in the kitchen or a back room. This means that in some instances the appearance of the piece of equipment can be as important as its functionality. In other cases, the primary concern is that the item operates properly and looks are not a consideration when making the purchase.
When you are attempting to control costs in your operation you have the option of buying new or used equipment for your restaurant business. Let’s take a look at some of the benefits and disadvantages of buying new or used restaurant equipment to help you decide which way to go when planning your purchasing strategy.
Buying New Equipment
New equipment usually comes with a higher price tag than used equipment. According to katom.com, there are a number of factors that may sway you toward buying new equipment despite the savings inherent in buying used items. Here are some of the major reasons you may want to purchase new rather than used restaurant equipment.
Reduced maintenance – New equipment is less likely to need maintenance than a used component. Service calls are expensive and can quickly eat up the savings that you thought you had achieved by buying second-hand equipment. Parts may also be hard to obtain in the event that a replacement is required.
Longer warranties – New equipment will have a manufacturer’s warranty that may extend for the life of the item. Contrast this with the short-term warranty you might get with a used piece of equipment.
Better performance – Technological advances will often mean that a newer piece of equipment will perform at a higher level and also be constructed to minimize water and power consumption. This leads to steady savings over the life of the equipment.
Get exactly what you need – If you are ordering a new piece of equipment you can insist on getting all of the features that you need and desire. You may have to make concessions when buying used and have to settle for a less than optimal component for your restaurant.
Conform to health standards – As technology advances and materials such as stainless steel are used more often to assist with cleaning, health standards also evolve. That used piece of equipment that you are considering buying may end up causing you some issues with the health inspectors and have to be replaced sooner than you had planned.
Buying Used Equipment
Used equipment can afford you substantial financial savings over purchasing brand new machinery. While at first glance, this may be all of the incentives you need to buy used stuff, slow down for a minute. As with any strategy that saves you money, there are some aspects of buying used restaurant equipment that you need to consider before making your decision. According to restaurant.org, here are some of the key factors to keep in mind when thinking about purchasing used equipment.
Know your requirements – If the equipment is an essential part of your business, such as a pizzeria’s oven, you should be cautious of used components. Make sure that the equipment that you are buying is actually what you need, and not a compromise determined solely by price.
Cost of the used item – Paying more than 50% of what a new piece of equipment would cost is probably not worth the savings.
Consider the total cost of ownership – You may save some money on the initial purchase, but over time a used item may end up costing you more in operating expenses. Saving on energy and water bills can help boost your bottom-line, and older models that are not as efficient can offset any saving made in the purchase price.
Reconditioned equipment – If the seller has reconditioned the item and perhaps replaced parts, it may be more serviceable than one that is bought “as is”, but will generally have a higher price tag.
Warranties – Some dealers offer 30 to 90-day warranties on used equipment. This will not be the case for items bought at auction or through a private individual where no warranty is the norm.
Service and part availability – Can your equipment be serviced and can you obtain replacement parts? If not, it is a very risky undertaking if it is an important part of your operation.
Check the operability of the equipment – Ask the dealer to hook it up and see how it works. A reputable dealer will do that, though when buying used parts online this not practical.
Does the equipment stand up over time – Ovens, ranges, and stainless steel tables will last for a long time with no performance degradation. Other items like dishwashers and ice machines may not have as long a life if not maintained properly by the former owners.
Finding design-savvy ways to magically create extra storage space in a tiny bedroom isn’t always easy. While unsightly over-the-door organizers and bulky dressers are always an option (if you squeeze them in), it pays to use your imagination and get creative when coming up with stylish storage ideas. To help make your life a little […]
