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Weekly News (July 29, 2020)

This week’s Interest Rate (31th  Week)

(By Fairway Asset )

   30 yr fx(%)  15 yr fx(%) FHA(%) 10 yr Tr Y (%)
A year ago      3.875       3.375    
A month ago      2.899       2.370     2.625          0.750
Last week      2.875       2.375     2.625          0.605
This week      2.875       2.375     2.625          0.595

(The rate based on 25% down payment with 740 above credit score)

                                 Prime Rate:3.0% / Ref IR: 0.00- 0.25%

 

Covid-19 Overlays

Potential home buyer — Do not apply deferred payment or forbearance program.  If applied , they need to complete the program as soon as possible.

Self employed borrower – Need to prepare 2 mo business bank statements and the YTD income of 2020 can’t declined more than 20% compared to last year.

Credit: No late payment allowed for mortgage — last 12 month period

 

Triple Five, the developer of ADM(American Dream Meadowland) is grim

( The WSJ    7/15)

  • The 3M sf mega-mall was temporarily closed in Mid-March and some tenants have withheld rents because of the mandated closures. It was to reopen on June 1, but the Memorial Day killing of George Floyd while Minneapolis police custody and the ensuring protests pushed the date to June 10. Triple Five has spent $5.7B on the property.
  • While tenants are going through the pandemic, some of them file bankruptcy: GNC holdings filed the bankruptcy and closed 1200 stores including in ADM. ADM sued a Korean Restaurant owner for breach of contract, alleging that the tenant had refused to construct and open its premises according the lease.
  • Malls in NJ are allowed to reopen starting 6/29, but ADM has yet to announce a date.
  • As older shopping venues fade, ADM could be a survivor in a post-COVID world if it keeps a relevant mix of tenants with such entertainment facilities, according to analysts: Humanity desperately needs be entertained.

 

EB-5 investors is pushing Related Companies to open the books

( TRD /Jason Shim  7/28)

  • A group of Chinese EB-5 investors in Hudson Yards project is pushing Related Companies to open its books after developer halted payments in June because of the pandemic.
  • A lawyer representing 30 investors sent a letter July 16 to Related CEO Jeff Blau demanding on-site inspection of the company’s financial records. The lawyer dug into their contracts and realized that payments were considered discretionary.
  • The dispute is yet another headache for Related, which is contending with slow condo sales, construction delays and the closure of its Hudson Yards mall on account of the pandemic. Compounding matters, Neiman Marcus last week announced that it was walking away from the site some 16 months after it opened as its anchor tenant. Related Companies is now marketing the mall as an office location.

 

Stand alone commercials with Single tenant attracted to more investors

(The Korea Daily 7/26)

  • COVID-19 had changed investment trend: more buyers prefer to stand alone building with triple net(NNN) single tenant.  These tenants are mostly essential businesses like Grocery store, Pharmacy, Hardware stores who are possibly bigger scale chain stores.
  • JLL analyzed that single tenant triple net assets are more attractive when the stock market is unstable or speculative.
  • According to US Commerce Dept, revenue of online and catalog business are increased 23% in April and 30.8% in May respectively compared to the same month a year ago.  This means warehouse demand is increased accordingly.
  • Many organization investors, foreign investors, and individual investor with real assets are eagerly moving to this type of properties.

 

Flipping Business is still active under COVID-19

(The Korea Daily   7/26)

  • According to Atom Data Solution, total flip over sales for single houses and condos in 1st Qt were 53,705 which takes 7.5% of total sales.  It shows 1.2% increase from the previous Qt which was 6.3% and 0.2% increase form a year ago.
  • Average income was increased little: average income in 1st Qt, 2020 was $62,300 while income in 4th Qt, 2019 was $62,000.  Average income of the same period of 2019 was $60,675.
  • ROI (Return on Investment) was decreased to 36.7% in this period while it was 39.5% in 4th Qt, 2019.  ROI in 1st Qt 2019 was 40.9%.  The reason lower ROI is that flippers bought the house at higher prices before the pandemic and they could not sell the house that much higher because housing market was inactive relatively.
  • Internet Auction sites: Hubzu.com / Auction.com

 

Moderna Vaccine entered into the 3rd Phase of clinical trial to 30,000 people

(The Korea Daily 7/28)

  • Among 30,000 people, a half will get the vaccine twice and the other half will get saline water as “placebo”.
  • This vaccine called “COVE” (mRNA-1273) is the first vaccine out of Operation Warp Speed and this project received $1B government funds.
  • The Moderna company stock price went up 9.15% to $79.91 after the news announced.
  • The death toll in NY is 11 on that day and the infection rate is 1.06%.
  • The death toll in NJ is 17 on that day.

 

NEC Chair Larry Kudlow forecasted still V shape recovery

(The Korea Daily  7/29)

  • The chairperson of National Economy Committee in the White house is optimistic under the death toll of over 1000 a day in US. He mentioned that home sales has dropped 9.7% in may, but in June home sales has increased 20.7%.  In July, manufacturing has shown the first increase since March.
  • Also he forecasted that there is high possibility of employment increase in bigger scale and unemployment drop sharply.

 

US Consumer Index dropped in July as COVID-19 infection increase

   (The  Record  7/29)

  • Consumer Index tumbled to a reading of 92.6 from 98.3 in June. The weakness came form a drop in the expectations index, which measures consumer views about the short term outlook for income, business and labor market conditions.
  • The consumer index is closely watched for signals it can send about future spending, which accounts for 70% of economic activity.

 

Others/Tech News :  Four CEOs(Amazon, Apple, Facebook, Google) will be in high-profile hearing on Capital Hills today. 

(NYT 7/29)               

  • Classpass started selling their gym classes over the iPhone app/ Apple demands it’s portion of profits Airbnb started selling some virtual class material over iPhone app.

 


 

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Stephen Lee

He has been in Real Estate industry in about 20 years and has been Broker of Record for 9 years. His experience includes residential, commercial, and property management. Prior to involving with Real Estate business, he has been involved in the digital communication equipment industry utilizing his engineering background and education, including running own company. He has established C Land Realty in 2011 which has grown to staffing over 100 Real Estate agents and the annual transaction amount of over $110,000,000 today.

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