Weekly News (September 18, 2019)
This week’s Interest Rate
30 Y Rate: 3.875%/ 15 Year Rate:3.500%/ 10 Y Treasury: 1.808%/ Prime Rate:5.25%
Ref IR: 2.00- 2.25%
Northern New Jersey towns got sharp property tax increase for last 10 years
(The Korea Times 9/18)
- According to APP, Englewood Cliffs tax is up by 56.3% for last 10 years. 2017 current average tax is $12,850 while it was $8,219 in 2007. Fort Lee tax is up by 46.4% to $10,442 from $7,130 in 2007. Palisades Park tax is up by 19.3% to $7,885.
- Alpine tax is up by 44.9% and Demarest by 37.9%, Cresskill by 36.7%, Ridgefield by 33.5%, Leonia by 30.3%.
- Palisades Park will re-access property tax for next 4 years. By the order of State government, the town will re-valuate all real estate properties in town from 2020 till 2014.
An unprofitable “WeWork” delays IPO due to unimpressed investors
- WeWork, the shared office space giant, gained the backing of some the world’s top investors, but it received a much colder reception when it tried to sell its shares on Wall Street. Facing deep skepticism about its business model and corporate governance, the company has delayed its IPO by several months.
- WeWork, the biggest private tenant in Manhattan leases large amounts of office spaces and converts it into sleek work area that it rents out to professionals, start-ups and corporations.
- Though the company has grown quickly, it remains deeply unprofitable.
- Potential issues: 1. WeWork leases longer terms than average: 15 years (sub-tenants lease less than 5 years) WeWork puts a lots of money to convert them to sleek office spaces.
Investment immigration to overseas attracts people on Korea
(The Korean Times 9/17)
- Recently seminar events on investment immigration becomes popular in KangNam, Seoul, especially to US. US will increase the minimum investment amount to $900K from $500K which will become effective 11/21/2019 for regional center project. Individual investment limit is $1M and it will become $1.3M from 11/21/2019.
- For immigration industry in Korea, now it become a big market while 391 people have applied for I-526. It used to be about 100-150 and it became over 200 in 2017.
- This industry forecasted about over 500 this year.
- “Hudson Yard” project in Manhattan has EB-5 program – Recent inquiries are increased.
5 story mixed use building in Lower East Side, Manhattan sold at $5.8M($806/sf)
- At 146 Henry St at Rutgers St, Manhattan, this 5 story, 7192 sf building on the Lower East Side was built in 1900. It has 8 residential units and one retail store, which is occupied by New Fuzhou Supermarket. There is also basement.
- Brokers are Thomas Donavan, Stephen Dadourian, Eugene Kim and Tommy Lin of B6 Real Estate Advisors.
DOM (Days on the Market) becomes very critical to negotiate home prices
(The Korea Daily 9/17)
- According to NAR, average DOM in April, 2017 was 26 days which is shortest since 2011 when NAR started DOM tracking. In general DOM indicates important clues about the house listed on the MLS: Price is too high, some other issues with the house. Longer DOM on MLS systems, the weaker seller’s negotiation power.
- Local agent’s advice with expertise becomes critical to position the house in order to reduce DOM.
- Points to reduce DOM: 1. Availability to show House with LBX 3. Owner occupied 4. Renovated house.
- Sometimes, un-list from the market and re-list so that DOM can start from 1.
- Typically seller becomes irritated after 90 days which makes owner start thinking to change agent.
A Mixed Economic Picture ahead in US housing market
- According Lawrence Yun, annual home sales have been moving sideways in recent years: 5.4M in 2016, 5.5M in 2017, and 5.3M in 2018. As of June, this year’s total stands to be 5.2M on an annualized basis. From 2016 through the first half of 2019, the economy added 8 million new jobs at higher pay. In addition, household net worth grew by $13.5T, thanks to the rising stock market and surging real estate prices.
- Unyielding homeownership rates led to a more concentrated build-up in wealth than if ownership had expanded.
- Reduced tax benefits for homeowners is the main reason that home sales becomes sluggish. Fortunately mortgage rates make the market better.
- The housing supply remains a hurdle but steadily homebuilders are responding by building more spec homes and at lower price points, where the demand remains strongest.
- Pending contracts rose in June in all major US region, marking the first year-over-year gain in 17 months. Closing activity is expected to shoot higher in the second half of the year.
- The main looming worry is the impact of the intensifying trade war on corporate investment and stock market.
Prices is very stable even though low unemployment rates
(The Korea Times 9/17)
- Due to change of economy structure make prices hard to go up. In US even though low employment rats, prices stays lower than the level the US government pushes. Typically low unemployment rates boosts prices which is called Philips line.
- The reasons are 1. Globalization and 2. Technology development. Because of global competition becomes severe, each country’s domestic prices are being affected by global supply systems.
- At least for a while between 20 and 50 years, robot technology and AI systems will reduce the labor cost.