Otis & Ahearn, RE Downtown Weekly Reports YTD 3/17/17
– Pretty consistent sales transaction trends YTD. Absorption, Average and Median all trending upward due to high end activity.
Local and Global Newspaper Articles with Topics that Affect Real Estate:
LOCAL: Globe 3/17- For Tower Co. Signs, Policy Won’t Be Put Into Writing- City back tracks from plan to issue formal rules; will review requests individually.
LOCAL: Globe 3/17- Budget Imperils Medical Research- President Trump’s proposed budget (working its way thru Congress) targets a lot of topics such as Obama Care, increased defense spending, tax code, re-patriation of overseas non US domiciles, deficit reduction, reduction in government funding of many programs including NIH (National Institute of Health) …Massachusetts receives more NIH funding than any other state per capita.
LOCAL: Globe 3/16- Group Unveils Its Vision For Flower Exchange Site- Abbey Group on Albany Street, Lab campus is being proposed retail (restaurants, stores, cultural center).
LOCAL: Herald 3/17- Townhouse Bid Faces Legal Tussle- West Roxbury abutters sue to halt 18 unit project (Mayor aggressively supported) abutters file a lawsuit against zoning board of appeals and developer, Jacqueline Nunez, Dorchester based Wonder Group, Boston Planning and Development Agency approved the project also…”net = zero energy” use feature touted.
LOCAL: Boston Guardian 3/17- Bay State College Dorms To Become Residences- 260-262 Commonwealth Avenue – Chevron Partners, Marcel Safar plus a Paris based partner. “The reversion back to luxury housing for which Back Bay and Beacon Hill were built in the 1850’s thru early 1900’s – very straight forward why it’s happening and it is an era and triumph for cities”. Huge pent up demand across all price points. Harvard economist, Ed Glaiser-“Triumph of the city…How our greatest innovation makes us richer, smarter, greener, healthier, happier.”
RATES/FEDERAL FUND RATES: Globe 3/18- Fed Raises Key Rate Slightly As Expected- Economy is moving along, hiring is picking up, consumers are spending and businesses are starting to spend a little more too.
RATES/FEDERAL FUND RATES: NYT 3/16- The Fed’s Message: Exhale- Yellen’s (Federal Reserve Chairwoman) – Yellen’s optimism suggests a return to economic health…Interest rates will go up gradually.
RATES/FEDERAL FUND RATES: WSJ 3/16- Federal Fund Rates, Signals Gradual Increases Ahead- Same topic/big news. In 2008, Fed Reserve move a single target number to a target range. Robust economy clears Yellen’s parth. The Fed kept rates at zero from the end of 2008 thru most of 2015. NOTE: Mortgage rates remain low from a historical perspective.
RATES/FEDERAL FUND RATES: FT 3/16- Fed Increases Interest Rates As Inflation Pressures Loom- US central bank has increased short-term interest rates for the third time since the financial crisis …the “dot plot” (increasing federal fund rate slowly…typically at .25% intervals to ease the introduction of rates going back to more normal levels). NOTE: Projections for: YE 2017 = 1.375%; YE 2018= 2.125%; YE 2019= 3%.
FEDERAL FUND RATES: FT 3/13- Investors Primed For Tougher Fed Stance- The Ts, 10 year note yield (rate went up to 2.60%) but it dropped Friday back to 2.52%.
FEDERAL FUND RATES: WSJ 3/13- Fed And Markets On Same Page On Rates- Dot plot mentioned again.
FEDERAL FUND RATES: Globe 3/13-Rate Move Would Signal Return To A Normal World- NOTE: The rate level stated as the appropriate one to contain inflation = 3.75% another plus 300 basis points or +3% and if you divide by .25% = 12 different rate, increasingly annually at say 3 or 4/ year = 3 to 4 years to get back to normal of +3.75%. NOTE: Where it was in 2007 at 5.25% – why didn’t the Fed stop at 3.75% in the 2000-2007 cycle.
FEDERAL FUND RATES: WSJ 3/17- Markets Bet On Growth As Rates Rise- Central banks around the world are signaling a move away from the ultra-easy money. NOTE: Investor Exuberance = Following Wednesday’s Fed meeting, US stocks climbed, benchmark bond yields SANK as Prices of Bonds went UP. NOTE: Comment RE China raised several short term rates for the second time this year to try and prevent capital from leaving.
FEDERAL FUND RATES: Globe 3/13- Trump, Yellen May Be On A Collison Course- For the Federal Reserve it was the final confirmation that the time had come to raise interest rates to “prevent the US economy from overheating” and Trump has said he’s determined to stimulate faster growth.
HOUSING: NYT 3/13- Toronto’s Housing Boom Refills Empty Nests Driving Prices Even Higher- Some owners are not selling because kids are still living with them saving up for down payments for their first house. NOTE: prices +30% over last year.
HOUSING: NYT 3/15- Kushners And Chinese Company Weigh $400 Million Tower Deal- A New York real estate company owned by the family of President Trump’s son-in-law has been negotiating to sell a $400 million stake in its Fifth Avenue flagship, a Chinese Insurance Company – An Bang. Why is that name familiar?
HOUSING: Globe 3/13- Worries On Tax Cuts Hurt Affordable Housing Plans- The reason: The credits are a popular way for investors to reduce their tax bills; when taxes drop, so does the demand for tax saving investments…with fewer dollars raised for selling tax credits projects will need to fill funding gaps. i.e. cut costs, raise more equity, etc.
HOUSING: WSJ 3/17- An Unusual Turn, Goldman Snaps Up Bad Home Loans- NOTE: Why Goldman gets credit with regulators by helping borrowers get current and improve their credit and then Goldman sells to to the appropriate pool down the road.
ECONOMY: WSJ 3/17- Economic Boost Seen Fading In Long Term- Since the election of Donald Trump stocks have soared, bond yields have risen and economists have raised their forecasts for economic growth and inflation.
STOCK MARKET: Globe 3/17- Wall Street Bonuses Continue To Skyrocket- This inequality fairness is one reason why the Dodd-Frank Regulations come after the Housing Bubble and Financial Crisis and they were/are so stringent on banks because it wasn’t/isn’t the major reason which was strengthing on the banks and financial system by requiring more capital for reserves for losses and restricting enormous risk taking in banks trading with their own capital.
Also, a reason why President Trump has taken the position that carried forward interest profits for big Wall Street players is only 15% , so they benefit from being bailed out in some instances (some when allowed to fail that we’re not big or important enough like Lehman Brothers, Bear Stearns and others).
STOCK MARKET/RATES: NYT 3/13- Share Prices Jump, But With Fed Cautious Bond Yields Drop- Typically good news about stock prices which would allow 10 year T interest rates to go UP because big investors are moving out of safe haven bonds and into higher yielding investments (i.e. stocks), but its yield/rate fell to 2.49% from 2.60% it didn’t the 10 year T prices went up.
STOCK MARKET/HOUSING PRICES/WEALTH AFFECT: WSJ 3/10- Stock Market Fuels A Boom In Household Wealth- The YE surge in stocks and a steady climb in home prices added more than 2 trillion of wealth to household balance sheets. NOTE: What happened in 2007 and 2009 recession.
HOUSING BUILDERS: Globe 3/16- Home Construction Builders Are More Optimistic- NAH Builders/Wells Fargo builder sentiment index released Wednesday jumped to 71 from 65 (and the highest level since 2005).
CHINA: Barron’s 3/13- At Last, Green Shoots For China’s Economy- China’s National Bureau of Statistics. NBC China’s Premier says that he needs only to Track 3 indicators to have a good appreciation of the state of China’s economy:
Electricity production: +8 – 9% above month-to-month, year-to-year.
Railway Freight Traffic: +10.4% (January 2017-2016), traffic has gone from 7% to 13.9% higher than a year ago in each of the 5 recently published reports.
Domestic Credit: Running at 9.7% year-to-year, slowing from unsustainable levels over the past decade.
CHINA: NYT 3/13- China Moves To Stem Tide Of Overseas Investments- China struck 225 billion in deals to acquire companies abroad last year. NOW with a worried eye on the money leaving its borders – is telling some of its companies to cool it.
