The real estate booms happening in cities like London, New York, and places like Silicon Valley are impressive, but they may have little to do with housing. Many of the houses are being bought then left empty. The purchase is purely a way to stash assets because stocks, bonds, and commodities aren’t providing good returns. The purchase may also be a way to launder money. Because many of the purchases are being made with cash and don’t involve bank financing and the subsequent review of the purchaser, the purchases can be made through shell companies. Shell companies can simply provide privacy to people like celebrities, but shell companies can also hide the source of the sale at either end. Illegal money tied up in a house, which is then sold and bought from shell to shell can launder money. To curtail such activity, expensive homes in Manhattan and Miami are being required to reveal buyer identities to the Federal government. The government’s activity is going into effect for 180 days, after which it may be rescinded or expanded. If the real estate activity has been legitimate, there shouldn’t be an impact on the markets. If not, then a new aspect of money flows and wealth accumulation may be revealed.

(Click on the photo for the link.)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s