10 Must Reads for the CRE Industry Today (November 18, 2016)

10 Must Reads for the CRE Industry Today (November 18, 2016)

 

  1. What Will a Trump Presidency Mean for New York Real Estate? “Two months ago, Pierre E. Debbas, a partner at the boutique law firm Romer Debbas, was representing a couple buying a Manhattan condominium who wanted the option to back out of the deal if Donald J. Trump won the election. After Mr. Debbas explained that no seller would agree to such a contingency, they signed the contract and took their chances. Other buyers and sellers have been skittish, too. By the morning after Mr. Trump’s upset victory, nerves were downright frayed, with buyers canceling viewings and delaying contracts, saying they needed to reassess, according to brokers, lawyers and developers. ‘People don’t know what to make of the new situation,’ said Stephen G. Kliegerman, the president of Halstead Property Development Marketing. ‘They don’t know if this is going to have a positive or negative effect on the economy.’ But even a few days can make a difference. By the end of the week, potential buyers were rescheduling appointments they had canceled on Wednesday, Mr. Kliegerman said. Others who had spent the summer cautiously eyeing apartments were finally signing contracts, relieved that the election was over. ‘The phone has been ringing a lot this week,’ Mr. Debbas said. ‘People are realizing that the world’s not ending.’” (The New York Times)
  2. How to Buy Real Estate With No Money Down “Let me tell you there is no such thing as no money down. No bank will lend you money with no money down, and no seller will carry a note without you putting some money down even if it's a promise to do money in the future. There is no such thing as no money down because the money is going to come from somewhere. It’s money down if you're going to have to do something if you have to exchange something with the person giving you something. If they're going to give it to you for nothing, then trust me, you don't want it. So the question becomes, how would you raise money if you don’t have any money? The first thing I say, and I say this over and over, is that the deal is what matters, not how much money you have. I say it doesn't take money to make money, it takes guts and courage. The thing you should be chasing is the deal, not your budget. Most people make decisions on how much money they need based on their job and on how much money they spend, but this is backward. You should make the decision on how much money you want regardless of how much money you spend. This is why people never get ahead. The deal is senior to the amount of money you have.” (Entrepreneur.com)
  3. President-Elect Trump Seeks Delay in Fraud Trial Over His Real Estate UniversityDonald Trump is pulling out the stops to stall a fraud trial over his defunct real estate ‘university’ until he’s president. Having earlier persuaded a federal judge to delay the trial until after last week’s election, the president-elect now says he has too many responsibilities as he prepares for his inauguration to be diverted. And if that doesn’t work, he may challenge how the jury pool was selected. Trump’s lawyers head to court Friday to convince the judge in San Diego to put the case on hold until next year. That’s the same Indiana-born judge who Trump attacked during the campaign as being biased against him because of his Mexican-American heritage. U.S. District Judge Gonzalo Curiel, for his part, has said he thinks the best option would be for Trump and plaintiffs claiming they were cheated by his real estate seminars to settle the case and avoid what would be the first trial in U.S. history to feature testimony from a president-elect.” (Insurance Journal)
  4. Foreign Investors, Private Equity Snapping Up Senior Housing Real Estate “With strong headwinds buoyed by promising demographics, the U.S. senior housing industry has become very attractive not only to the traditional buyers of health care real estate, but also increasingly to private equity and overseas investors. As health care real estate investment trusts continue to make strategic dispositions and refocus their portfolios, foreign capital is seizing acquisition and joint venture opportunities with some of the biggest senior living real estate holders, according to a report released this week from credit-rating company Fitch Ratings. ‘Foreign investors are increasingly looking to invest in US healthcare real estate, particularly those with longer term horizons such as sovereign wealth funds, pension funds and insurance companies,’ Fitch writes. After record transactions recorded in 2015, REITs took a step back in their acquisition activity in 2016, instead becoming net sellers. Picking up the slack in M&A was private equity, according to Fitch.” (Senior Housing News)
  5. Economy Watch: Interest Rates Likely Headed for a Hike “Nothing is certain in the tight-mouthed world of central banking, but Federal Reserve Chair Janet Yellen came close on Thursday to suggesting a policy change. Speaking at the Capitol before the Joint Economic Committee of Congress, Yellen ticked off various kinds of positive data about the U.S. economy. For instance, job gains averaged 180,000 per month from January through October, a somewhat slower pace than last year but still well above the pace necessary to absorb new entrants to the labor force, Yellen said. “The unemployment rate, which stood at 4.9 percent in October, has held relatively steady since the beginning of the year. The stability of the unemployment rate, combined with above-trend job growth, suggests that the U.S. economy has had a bit more ‘room to run than anticipated earlier.’ Meanwhile, she added, U.S. economic growth appears to have picked up from its subdued pace earlier this year. After rising at a meager annual rate of just 1 percent in the first half of this year, inflation-adjusted GDP is estimated to have increased nearly 3 percent during third-quarter 2016. Also, ‘consumer spending has continued to post moderate gains, supported by solid growth in real disposable income, upbeat consumer confidence, low borrowing rates and the ongoing effects of earlier increases in household wealth,’ Yellen said.” (Commercial Property Executive)
  6. Apartment Renters Receptive to Green Features, Especially Those That Cut Utility Costs "In a recent survey, Freddie Mac found that U.S. renters are more worried about rising utility bills than rising rents, and that nearly half of renters surveyed say they’re willing to pay more for rentals with cost-saving water and energy features. There was also no change in the propensity to rent, with a small majority saying they expect to rent their next home. Compared to earlier surveys, the new research (done in September) shows more renters saying they’re satisfied with their rental experience, but worried about their financial situations. A majority of renters say they put more importance on saving for emergencies, children’s education or retirement than on down payments for a home. For the first time, the Freddie Mac survey included questions about renter perceptions and concerns about utility costs. One finding from those questions was that 70 percent of renters say they’re moderately to greatly concerned about higher utility bills. By contrast, only 63 percent shared the same levels of concern about potential rent increases. Seventy-four percent say higher utility bills would have “some impact” or a “great impact” on their household finances, almost as many as those who said the same (78 percent) about higher rents.” (MultiHousing News)
  7. Housing, Multifamily Starts in U.S. Spike 25.5 Percent in October “According the U.S. Department of Housing and Urban Development and the Commerce Department, led by impressive gains in both single-family and multifamily production, nationwide U.S. housing starts surged 25.5 percent in October 2016 to a seasonally adjusted annual rate of 1.32 million units. Single-family starts reached their highest level since October 2007 while multifamily production jumped 68.8 percent from the previous month. ‘These robust figures correlate with strong builder optimism in the housing market,’ said Ed Brady, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Bloomington, Ill. ‘A firming job market, a growing economy and rising household formations will keep the housing recovery on track into next year.’” (World Property Journal)
  8. With supply and concessions on the rise, owners struggle to find renters for luxury apartments “Even with steep price cuts and a slew of concessions, owners are struggling to secure renters for their luxury apartments. Developers are increasingly offering free rent — in some cases three months worth — and it’s becoming difficult for individual owners to compete, the Wall Street Journal reported. Supply is also high: Currently, 1,100 apartments (mostly in Manhattan) are listed for $10,000 a month or more. A recent Douglas Elliman report noted that just under 24 percent of Manhattan leases signed in October had some type of concession.The market has changed completely,’ Sherri Shang, a Douglas Elliman Broker, told the Wall Street Journal. ‘I never expected three years later that even with a Central Park View, that it would be so hard to rent out now.’” (The Real Deal)
  9. There’s no place likes stores for the holidays “Want to get in the holiday spirit? Visit a store. The overwhelming majority (75%) of Americans believe shopping in a store is one of the best ways to get in the holiday spirit, while 58% say that online shopping takes some of the fun out of holiday shopping, according to new research by Citi Retail Services. The survey also revealed that 95% of Americans will buy at least one gift in a store this holiday season. More than three-quarters (79%) said that shopping in a store over the holidays is just as much about the experience as finding the right gifts. When asked about American family traditions, 42% respondents indicate that visiting a store as a family to shop or view holiday decorations is even more common than singing holiday songs or carols (25%).” (Chain Store Age)
  10. Fewer young people are living in LA, and high housing costs are likely to blame “LA’s population is aging a bit faster, as young people leave the city for more affordable metros elsewhere in the country, according to a new report from Apartment List. The real estate listings website looked at Census data of 18- to 34-year olds from 2005 to 2015 and found the number of millennials living in Los Angeles dropped 7.4 percent in that time. That’s a significant decline. It puts LA near last, or 48th, out of 50 U.S. metro areas in millennial population growth. Andrew Woo, Apartment List's director of data science, told LA Weekly that the high cost of rent combined with LA’s sluggish incomes might be deterring young people from living here. Many residents are paying well over the recommended 30 percent of their income on rent each month, recent studies have shown. Beyond renting, ‘Fewer millennials are settling in L.A.,’ said Woo. There’s a lot working against millennials aiming to put down roots in Los Angeles. Apartment List found that Los Angeles’s millennial homeownership rate had fallen 7.3 percent since 2005 (close to the nationwide average of 7.4 percent), and a report from online loan marketplace LendingTree earlier this year asserted that those young people who do manage to buy a home are faced with some of the steepest mortgages in the country—not easy to stay on top of, considering that Apartment List also found that median incomes in LA have dipped .6 percent.” (Los Angeles Curbed)

 

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