That's true of Manhattan but much less so for other boroughs. And rich people still tend to occupy only one unit. Foreign buyers remove units from the pool entirely while contributing less to the local service economy, mad there have been large new luxury buildings where most of the units lack full time residents. That's unhealthy for the city.
Most of Manhattan got too pricey for working class families a decade or more ago (unless hey have rent control.) it's a much bigger crisis that large portions of the other boroughs might head that way.
While foreign buyers who leave apartments unoccupied is an interesting phenomenon, it's also a very bad way to "invest" an more of a quirk of the ultra-rich. I also doubt that numerically it is a big contribution to the demand for housing.
In spite of what you said about rich people only occupying one unit, there is always going to be some elasticity in where people live, and the demand for housing can also grow as more high paying jobs are created. From what I have seen, price rises in the other boroughs is mainly driven by people with high incomes who either can't afford Manhattan (but are still fairly wealthy) or choose not to live in Manhattan.
From an NYT article a few years back, the estimate for Manhattan was that 30% of new condo sales (admittedly a minority versus coops in NY) were foreign buyers. That would still be a material share of overall sales. In an already tight market that's a huge number of sales not tied to local income growth.
Merely having a foreign buyer doesn't imply that the apartment will remain empty. And if the apartment is rented, it doesn't really make a difference if the owner is foreign or not.
So the real issue is how many apartments are being left vacant by the owners, or only used rarely by the owners.
Except they do remain empty, which is why this is such an issue in NY and London right now.
Which now looks pretty much like this: "In a large swath of the East Side bounded by Fifth and Park Avenues and East 49th and 70th Streets, about 30 percent of the more than 5,000 apartments are routinely vacant more than 10 months a year because their owners or renters have permanent homes elsewhere, according to the Census Bureau’s latest American Community Survey."
There are about as many seasonal or occasional use residential units as there are rent controlled units ~40k. That's out of more than 3.3 million residential units.
Just as articles about rent regulation usually focus on a rent controlled apartment, rather than the far more numerous rent stablized (~1 million) because they make for better stories, so too do empty floor is luxury building on fifth avenue.
But I fail to see much relevance to the larger housing market. Particularly as it relates to the type of working class people this article talks about.
Based on those numbers, 20% of units not rented out by a landlord or vacant are seasonal/occasional use in Manhattan. That seems like a pretty major chunk, considering this isn't a vacation town. (And don't forget "Manhattan" includes a huge chunk of rental housing above ~96th street, which is a much less appealing market to foreign buyers.
It's definitely relevant to the overall housing market, because while 20 years ago the bankers and lawyers would have rented or purchased on the Upper East Side or Upper West Side, they're now (often) priced out and buying places in Brooklyn and the Bronx. 15 years ago I used to see a working class neighborhoods when I walked around on the far side of the river in Brooklyn, LIC or even Hoboken/Jersey City; now there are multi-million-dollar apartments there.
Any time you hear investment bankers talking about how they can't afford a 2-bedroom in Manhattan, something's gone seriously out of whack with the real estate market.
I'm not sure you're reading it right. What it says is that 20% of the vacancies (as of that time) were those set aside for seasonal or occasional use. But that has more to do with the very low vacancy rates that Manhattan has had essentially forever, than with the absolute number of such apartments.
While the knock on effect you mention could have a legitimate effect, with only 1% of the apartments affected it's hard to believe it's terribly significant. Particularly since at the stratospheric levels we are talking about (high level bankers and lawyers) the substitutes for UES/UWS spreads include Long Island and Westchester rather than just other parts of the city.
Queens & Brooklyn dwarf Manhattan in size. Queens has only one or one and half neighborhoods with Manhattan exiles and even though Brooklyn has more, the non-trendy ares are still much larger.
This whole perception of a crisis is fomented by young, hip, creatives who think they have a good given right to live in the West Village. There's still plenty of safe, affordable rentals in places like Flatbush, Kew Gardens, Pelham Bay, and so forth.
Regarding foreign buyers, I am not sure if this is a bad way to invest. According to this this recent piece from the New York Times a similar phenomenon could be occurring in London with pretty good returns
I was referring to the practice of buying an apartment and leaving it empty. This is a bad way to invest because there is no rental income. The article you linked refers to buyers who only care about rental income.
The point I am trying to make is that there are two phenomena. First the very rich who buy an apartment that they rarely use just because they can. The second is more high paying jobs in the area driving up demand.
What I am arguing against is a third "macroeconomic" phenomenon where foreign investors looking for somewhere to "park" their money drive up prices directly. The only thing that makes NYC attractive to foreign investors is the local demand for housing.
Most of Manhattan got too pricey for working class families a decade or more ago (unless hey have rent control.) it's a much bigger crisis that large portions of the other boroughs might head that way.