- How many Amazon employees already live in NYC or are already planned for relocation there for non-HQ2 things.
- The frequency at which a typical person around there buys new condos
Without knowing those, it's hard to have priors, or to begin to decide whether this is a departure from those priors.
> but the Journal reports that one brokerage firm sold nearly 150 units just last week, 15 times its normal volume.
> Amazon announced last week that it would be splitting its second headquarters between Long Island City in Queens and Arlington County, Va., ending months of jockeying between cities and speculation of where the tech giant would land.
> There are no exact numbers on how many units have gone into contract in the Long Island City area since the announcement, but the Journal reports that one brokerage firm sold nearly 150 units just last week, 15 times its normal volume.
"Apple Employees buy a home in SJC before iPhone launch" "Goldman Sachs Employee buys home in TriBeCa during bonus season" is not something you read regularly.
Additionally, this is talking about a macro trend across an industry, while the current article is talking about 2 employees out of hundreds of thousands.
The article from 15 years ago is also not discussing the legality.
I trust you can do the math from here.
This is exactly what I was wondering, I know there are rules against insider trading, but I wasn't sure if there were rules against people buying property based on a potential location for a new HQ.
Similarly, if advanced real estate purposes were made with the intent of resale I'd imagine you'd also get hit with insider trading. I think it'd be pretty reasonable to prosecute them anyways since they are using insider knowledge of market movements to gain an edge in the real estate market.
Then prepare to be surprised
> Similarly, if advanced real estate purposes were made with the intent of resale I'd imagine you'd also get hit with insider trading
You'd imagine wrong
> I think it'd be pretty reasonable to prosecute them anyways since they are using insider knowledge of market movements to gain an edge in the real estate market.
That's not what insider trading is in the eyes of the law.
Insider trading applies strictly to securities. Commodities markets have laws against front-running. But that's about it.
If you take information that your company is going to suddenly need a new metal and you go buy all the mines then about all your company can do is fire you.
I do mining. It's not illegal by any means. How else would a company obtain the resources they need if not for looking for them, either in the earth or in the marketplace?
The article you cite does not provide references to such law either; in fact, it neither has the word "fraud" nor "insider" in it. This article was about bribery, particularly of foreign officials; and the prosecutions attempted by the SEC led to consent decrees, not new securities laws. (The FCPA, however, eventually did get passed by Congress to outlaw the practice; but that is not a securities law.)
In fact, the article itself states:
> Proxmire believed that although the SEC had done all it could under the disclosure program, what was really needed was a law specifically prohibiting foreign bribery. The existing laws were not sufficient, as they addressed only the means through which a bribe might be paid, but not the act of paying a bribe itself.
So it's unfortunately not very helpful.
"Employee will hold all Confidential Information in strictest confidence and will not acquire, USE, publish, disclose, or communicate any Confidential Information except as required in connection with Employee’s work"
Capitalization of USE mine otherwise verbatim.
Heck at the rate of turnover and the job market they just could be a few employees leaving Amazon for a new position in NYC.
That said, I don’t think they have any mechanism to enforce it.
So the real question here is "which employees, and what did they know?". Or even better, will they be living in these condos for a few years, or selling them in 3 months?
The result is much less volatility on the market.
Really tired of the HN thought-police censoring ideas by downvote. If you disagree, reply and make an argument.
We shoud tax short term capital gains on property at 100 percent. Nobody should be able to profit by driving up the cost of housing.
Yes it is.
> Flipping is simply trading,
Usually, not: flipping is typically short-timeline buy-improve-sell cycles (that is, it's exploiting market irrationality where certain improvements add more to market clearing price than they cost to add.)
This does bring up prices.
The principle behind capitalism is that you create value and get a portion of the value thereby created as income/return. Land value appreciation very much doesn't fall into this category, unlike every other investment in which 1) the capital serves an allocative purpose and 2) is being put into productive use by someone else. Land value gains are generally extractive (and destructive, through the inefficiency it introduces) of the wealth created by nearby economic activity. I know someone who bought a bought a house in Beverly Hills in the 70s for $30k: forty years and a ~million dollars of value growth later, they sold it and collected four decades of extraction from the economic activity of the area around them. There's no universe in which this is sensible policy, and as you rightly point out, encouraging it through tax policy is even more insane.
I think it's something about homeownership that makes people hyper-defensive about this topic and unable to think clearly. I can't say I relate, given that my dad's career (and an outsize portion of his portfolio) in real estate doesn't prevent me from seeing the issue clearly.
Why should somebody not be able to take advantage of that? What if they simply wanted to move two streets over? But now could not because the somebody thinks it's unfair that housing prices whent up.
But your other points are messy. People in the cominity are building that value over time by being good citizens of the region. Had they been bad citizens nobody would have moved in and continued the process of building the cominity. It also cost a ton of money to keep your house in proper working order with also increases the demand and again raising the value of the proeprty.
I have so much more to say but I am replying on a phone and I can't stand it. Phones are horrible.
There is no universe where somebody could buy a house for 30k and forty years later be told even though they sold it for millions that they gave to give it all back - and then try to find another house for 30k. God I hope I read your post wrong.
This isn't incompatible with supply and demand at all, and from your comment, you don't appear to have understood my comment at all.
If someone wants to or needs to own for a short term, a sensible policy is to ensure that they don’t profit from
Everything else is censored by downvoting.
You need to live there for 2 of the past 5 years to claim your $500k capital gains exclusion.
Otherwise the normal short-term/long-term capital gains rules apply.
Also. I find no moral issue with this at all. Nor do I think it is somehow unfair.
Even so Jeff him self could and I think did pick a place located near some of his houses.
We really need to stop getting outraged when somebody else gets ahead. This is just pure jealousy and is very toxic.
Pissing I somebody else's limonaid is not going to make yours taste any sweeter.
Technically it's "securities," which is a broader array of financial instruments than stocks. But I'm not sure that real estate, particularly real estate that one might use as a primary residence, is considered a qualifying security with respect to SEC insider trading laws.
1) Trading on "inside knowledge" is not really a crime, or even a problem. Everyone knows something the other doesn't: thats why you trade on it. You sell your knowledge and knowhow.
2) Why do you think the employees of amazon are less entitled to that gain that the landlords or queens that have almost no relationship whatsoever to the company and have somehow a windfall
3) The ultimate loser of not being able to capture the externality value produced is the company, i.e. the shareholders. This is the other side of the coin of when amazon bargains for tax breaks: some people will be made wealthier for a tangential participation.
Are you jealous?
They could rent it out. If LIC is expecting an influx of highly paid workers, rents are bound to increase significantly over the next few years and if things work out, the condo prices will increase even more. Why not hold onto it for a few years collecting rent and then cash out with a nice long term capital gains tax treatment on possibly significant capital gains?
ARREST THEM! People shouldn't' be spending their paychecks on a home with a decent commute to work.
Hopefully they display journalistic integrity and update the story.
>Insider trading, I often say, is not about fairness; it’s about theft. There is no general prohibition on the use of material nonpublic information in stock trading, and in fact investors are supposed to find out new facts, and trade on them, so that prices can be more informative. Insider trading law is really about the misappropriation of nonpublic information that belongs to someone else — a corporate CEO using information that belongs to shareholders, or a therapist using information that belongs to her client — rather than the “level playing field” that prosecutors love to talk about.
Yet I just don't get this argument of his. As far as I can tell, insider trading prohibitions are intended to protect the integrity of the market. That's why they are administered by the SEC. If you steal office supply, the SEC doesn't get involved. If you steal trade secrets to build an exact replica of <widget>, the SEC also has nothing to do with it.
"Integrity of the market" in this case means that every investor can at least somewhat accurately estimate where they stand in the competition with other investors. That doesn't mean it's a completely level playing field; Large funds with the resources to send employees to every walmart and count the cars in the parking lot will always have an advantage. And that's not a bug but a feature, since it's the mechanism by which investors are rewarded for uncovering information.
But those are what one might call "known unknowns". What could easily destroy the market are "unknown unknowns, the Deus Ex Machina taking all your money, with not even the theoretical chance to compete without leveraging insider information yourself.
As an analogy, it's like a usual casino, where you know your expected value is slightly negative. And one where, with no predictability, the staff sometimes just takes all your chips and kicks you out.
All that appears to me rather close to the concept of "fairness". Not for any moral considerations, but simply to avoid the inevitable death of an "unfair" market.
(There's a fair (stolen?) chance that Matt Levine is right and I'm wrong. If you are looking for investment or legal advice, he is far more capable than me.)
(I also think this very case somewhat supports the view above: Surely buying real estate ahead of the market is an opportunity that Amazon itself could have used profitably. Thus, it would appear to fit the definition of "theft of information that belongs to the company")
To keep things in perspective, there are >8 million people in NYC and >20 million in the surrounding areas. Amazon is planning to employ 25,000, which is tiny in the scheme of things, especially considering that it's going to take a decade to be fully up and running. On top of that, I'm sure that many, if not most, of these employees are going to come from NYC's existing workforce.
I used to work in Long Island City and I commuted from Manhattan's Upper West Side, which took about 30 minutes. Commutes are even shorter from must of lower Manhattan and Brooklyn, not to mention most of Queens. I just can't imagine that this is going to have a noticeable effect on NYC or Long Island pricing overall.
 to those not familiar with New York, Long Island City, despite the name, is a neighborhood, not a municipality, located in Queens. While technically Brooklyn and Queens are located physically on Long Island, typically when people say "Long Island" they are referring to those parts of the island beyond New York City borders.
Apartment prices have been dropping in LIC for a few years because of all the new development. I can't imagine Amazon's announcement will slow the development pace, so I wouldn't be surprised if LIC rents do not rise at all.
Today it will be more like 2.5 to 3 hours to get home... Thank god for work from home tomorrow!
LIC is already basically full of luxury high-rises, so it's unclear to me that it'll get significantly more expensive.
Of course, what the hell do I know about real estate.
It depends on whether NYC/NY will invest in it. People have talked about LIC being the next great thing for decades. I guess sooner or later, it will be LIC's turn. But I don't think AMZN is it.
> you can live in Manhattan and get to LIC in 1-9 stops in < 30m.
Nobody who lives in manhattan wants to work in LIC though. That's the problem. Manhattan is the work hub of the satellite regions like brooklyn, queens, hoboken, etc. These regions aren't work hubs for manhattan.
> You could even live in Jersey City and get to LIC in 50m.
Depends on the part of jersey city you live in. Most people aren't willing to switch trains to get to work. PATH to Metro twice a day? No thank you. If traffic warrants it, you could probably take the ferry directly from downtown JC to LIC.
> Most people aren't willing to switch trains to get to work.
Not true in NYC. Plenty of people change subways once or even twice to commute. Changing PATH to subway is no different except you have to pay twice.
> you could probably take the ferry directly from downtown JC to LIC.
Currently there are no ferries that run this route directly. NY Waterway runs the Hudson River ferries, which the MTA (subcontracted out) runs the East River ferries. You could do this commute by ferry if you changed ferries at Wall St/Pier 11, but that point you might as well take the train.
I was under the impression that the MTA is not involved at all in the NYC Ferry system - it is run by Hornblower, a German cruise company.
[Edit: I am correct. Per https://www.ferry.nyc/about/faq/ "The MTA is a state agency, while NYC Ferry is an NYCEDC project."]
For instance, I know one strategy called "land entitlement":
Step 1) Find an area that has demand for a type of building or business that it is not zoned for.
Step 2) Buy an option on a plot of land in that area.
Step 3) Lobby the government to rezone that area / approve your project
Step 4) Execute option and acquire land and a fraction of its new valuation
This isn't directly analogous to the what happened in this instance, but essentially this is just a way for people with influence in local government to make money. Imagine if someone with connections to the FDA bought an option on a biotech stock and then convinced his friend, the commissioner, to help get their drug through the approval process. I'm pretty sure that would be illegal (or at least a gray area) -- but it's fair game in real estate.
For example, what if Bezos were to buy a ton of real estate in the DC area anticipating the value would go up after he announces Amazon will locate there, and he could effectively position himself as a "slumlord" of sorts for the surrounding real estate market?
The insider trading laws apply only to securities markets — even insider trading in commodities markets is mostly okay 2 — and that probably is because of some background expectation of a level playing field in those markets. Nobody expects real estate to be fair; it is not exchange-traded and liquid and fungible; it is just obviously a market where some people know things that others don’t. Insider trading in operation is about theft, not about fairness, but the reason that the law concerns itself with the theft of one particular kind of information — or, rather, with one particular misuse of other people’s information — probably is about fairness.
Edit: I stand corrected, Matt Levine is a lawyer.
Correct. Now, if these employees had purchased mortgage backed securities, then it would be a different story.
I do wonder if the seller of the condo might have recourse (under the outer edges of deceptive trade practices laws), or if Amazon itself would have recourse (by some kind of corporate opportunity doctrine).
And if Amazon does, can shareholders act for it, or force Amazon to act?
It's the third sentence in the seven sentence OP.
That's why there are no equivalents in commodities or real estate.
However, if Bezos were to buy a "ton" of real estate in the immediate area and then intervene in the process solely to enrich himself, the share holders of Amazon may feel they have used their money to enrich himself.
(I am not suggesting anything of the sort actually happened in this case.)
If you wanted to be sure of closing before the official announcement, you'd have to start your search more like 6 months ahead of time. I doubt even Amazon itself was sure of the location that far in advance. Maybe they had already decided to move there with no knowledge of the HQ2 location at all?
Or have they even closed on these properties? It's more plausible that they could learn the information, start a search, and get a purchase contract signed in a week or two if they were in a rush and not too picky. Then they would be fairly well guaranteed to be able to complete the purchase at a pre-announcement price. Assuming that the announcement does infact affect the price - this isn't that huge of a corporate move for the NYC market. But that also means that the purchases could fall through if there are legal questions about it.
On the surface, these condo purchases seem suspicious. OTOH, there are thousands and thousands of Amazon employees, so, one might ask: how many condos in NYC do Amazon employees typically purchase per month? Is that number zero?
Buying real estate ahead of such an announcement doesn't break any laws (edit: it might have violated employee agreements if Amazon has anything in there about acting on insider info, not an Amazon employee so I cannot comment on that). It's not as if this was a short dated deep out of the money call options play based on insider information (most definitely against the law; don't do this!).
if the underlying implication ever actually proves true, then i have to wonder how these 2 employees even got that info ahead of time. i would have thought only Bezos and few top execs would have known this info before the announcement.
Your concern should be with any elected official who offered Amazon concessions to locate in NYC. When their reelection comes up, it should be expressed that New Yorker's subsidized a trillion dollar company.
> Your concern should be with any elected official who offered Amazon concessions to locate in NYC.
Also, Amazon has thousands of employees in NYC already. LIC is close to Midtown Manhattan, a few subway stops away and is a neighborhood full of new construction.
It makes sense for any employees to buy there regardless of any situation...doesn't?
Since when is "Buying a nice apartment in a desirable neighborhood near work" a suspicious or criminal thing? Geez.
A person losing money due to insider trading has almost certainly invested in a company that was not worth what they thought it was. If they’re a victim, then whose victim are they really? I have a hard time blaming the insider trader.
So it's the right thing to do? Insider trading helps everyone by adding more information to the markets.
I understand why people are upset over Amazon's behavior with the new headquarters, but this article is scraping the bottom of the barrel for new headlines to stoke outrage over. There is literally nothing wrong with acting on insider information in a context outside of securities trading, which real estate is not.
That will include many to do the large amount of the work that needs to be done in New York before the new offices actually open.
It is quite likely that these condo buyers are such people, moving to New York to work on opening the new offices and then to work at those offices.
If it is only a small number of employees, there is no reason for them not to find housing in New York as soon as they can after finding out they are transferring.
more than 100 condos and over 100 mistresses, and literally tons of cash at home, a Chinese state company chief.
If I had to measure, using myself for scale, how little of a shit I give about two nerds at an internet company buying condos where they may be working next, it would be at about bacterium-level.