Situs Newswatch 11/30

New York’s Too Expensive So Try These Cities 

Nearly half of New Yorkers say their city is too costly, but most want to stay. A poll found that nearly half of the city’s voters say they can’t afford to live in the Big Apple. Just 50 percent of the 1,138 voters surveyed earlier this month by Quinnipiac University said they can afford to live in the city, compared to 47 percent who say it is too expensive.

Taking into account affordability concerns and sustainable property value attributes, a Situs RERC model also ranked New York City at the bottom of the primary U.S. markets. The bottom most rank of NYC for overall Commercial Real Estate was driven by tepid population, wage and job growth projections, and sky-high pricing.

Coming in second from the bottom: Houston.  Its fall from grace is attributable to the plummet in energy prices and their inability thus far to climb back up. Employment has fallen and growth in Houston remains uncertain due to its dependency on a full-bodied energy market.

So where are the most affordable places to live?

Situs RERC ranking say “Go West Young Man and Woman:”

Dallas, Seattle and San Francisco, respectively, took the top three spots among the primary metros. Dallas being driven to the top spot among the primary metros by a combination of relatively low pricing and strong population growth, income growth and job creation. Seattle holding strong to the number two position among the primary metros with the help of robust transaction volume, population growth and income growth, largely driven by the growth of industry-leading employers in the area like Amazon, Boeing , Facebook and Microsoft who attract highly educated employees with high levels of income.

Just In Time for Christmas – NYC Apartment Price Cuts

Holiday specials aren’t limited to flat-screen TVs.

The overpriced Manhattan real-estate scene has left some homes lingering on the market for more than four years, prompting huge price cuts that make them ripe for the picking, according to experts and stats compiled for The Post.

“Historically, we are now in the midst of the fastest market adjustment ever,” said Leonard Steinberg, president of the city real-estate giant Compass.

The prices of some high-end homes have been slashed nearly in half since hitting the market.

A penthouse duplex at 165 Perry St. in the West Village, where actor Robert De Niro once lived, has taken the biggest hit, with its asking price dropping 49.8 percent, from $39.8 million more than a year and a half ago to its current $19.8 million.

“The natural forces of markets have kicked in on their own,” Steinberg said.

There also have been extreme price drops in the much more affordable range, according to statistics compiled for The Post by real-estate Web site StreetEasy.

A one-bedroom, one-bath, 700-square-foot unit at The Beekman, a prewar co-op at 575 Park Ave., has been on and off the market since 2013 and was listed for $500,000 last year. This month, it was slashed by 40 percent, to $300,000.

Experts insisted the deep price cuts don’t mean that the units have problems.

“Sometimes, sellers shoot for the highest price points in a market without really knowing what the real transaction value for their property is,” said broker Michael Bolla of Luxury Lofts and Homes International.

This month, a buyer got a seemingly incredible deal when a Village town house sold for $6.8 million, even though it was listed for $13 million just last year.

read more: NY Post

For those who missed Ed Robertson’s presentation at the Stress Testing USA event, you can click here to download it. Its full of valuable insights on stress testing and financial institutions.

The Trump Effect: Bank Stocks Soar 

Optimism is higher than ever on a group of stocks that have specialized in disappointment.

Already in November, the value of American financial firms has been inflated by more than $300 billion, the most ever for the group as it benefits from optimism over Donald Trump’s presidential plans. Dealers are charging next to nothing for protective options and short sales are being covered in droves — all for stocks that have punished bulls every time comparable bouts of euphoria took hold since 1990.

The catalyst is Trump, whose election, according to Macquarie Group Ltd. analyst David Konrad, will usher in a “new world order” for the industry, raising trading, dismantling regulation and boosting rates. With investors gripped by what Evercore ISI’s Glenn Schorr called a return of “animal spirits,” skeptics wonder who’s left to buy.

“You have to become more cautious,” said Daniel Genter, who oversees about $4.2 billion as chief executive officer at Los Angeles-based RNC Genter Capital Management. “Don’t buy into excess strength.”

Right now, that’s not advice anyone is heeding. In options, the price of puts for the biggest financial ETF has collapsed relative to calls this month, with a spread known as skew reaching a one-year low, three-month contracts compiled by Bloomberg show. Short interest on the ETF slumped to about 1 percent from almost 5 percent.

read more: Bloomberg

Rising Mortgage Rates Help, but Also Hurt, Banks

Banks in the U.S. have much to be thankful for this holiday season. Higher rates on mortgages aren’t necessarily on the list.

The average rate on a 30-year fixed conforming mortgage has risen to 4.16%, according to the Mortgage Bankers Association, up from post-Brexit lows around 3.6%. Higher rates normally are good for lenders as they help them earn more on loans. Mortgages are a special case. Most are sold off to Fannie Mae or Freddie Mac and then packaged into securities. The portion held by banks stands at just a third.

Higher rates also suppress refinancing, which means fewer one-time gains for banks that make loans and sell them. For holders of mortgage-backed securities, though, this is positive. Fewer will be repaid early. As the heaviest holder of such securities among major banks, Bank of America should be the biggest beneficiary.

Ironically, though, after getting pounded by ultralow rates over the summer, BofA changed accounting policies so that quarterly earnings will be less affected. Now it will appear to benefit less from the rebound, though the impact is fundamentally unchanged.

Finally, if rates keep moving up, it could affect demand for homes. Rates are low relative to long-term averages, but a better gauge may be the post-financial-crisis average, which reflects what families are now accustomed to. Since the start of 2010, this has been just 4.22%, according to data from the Mortgage Bankers Association. If rates exceed that level, they could give some households pause before buying.

read more: Wall St Journal

Miami Beach an Airbnb Battleground

For the past eight months, Miami Beach has waged a war against short-term rentals. Its weapon of choice: $20,000 fines.

One property on Meridian Avenue has been walloped three times, totaling $60,000 in fines against the historical five-bedroom home. Owner Daniel Sehres may still be able to circumvent the fines — if he finishes converting the home into a bed-and-breakfast, an option available to him only because he falls into a narrow set of criteria.

But the cost to add fire sprinklers, a wheelchair ramp, impact windows and a slew of other requirements that will make the property a legal short-term rental make the fines look like chump change. When renovations are complete, Sehres expects to have paid $200,000 in upgrades.

Early this month, the home was in upheaval. Work trucks and crews have been a permanent fixture in front of 1545 Meridian since construction started in August. A ditch at the front of the house is designed to tie it to the city utility in order to install fire sprinklers. The brick in the back patio has been torn apart to accommodate a wheelchair ramp. The drywall is cracked where new impact windows have been installed.

read more: Miami Herald

Alcohol Good For Supermarkets’ CRE Values

Commercial real estate experts say that adding alcohol sales to supermarkets is a no-brainer that will boost asset values and sales for companies that secure the highly-coveted licenses.

The sale of wine in Canada grocery stores was launched in October in Ontario joining British Columbia which has permitted wine sales in grocery stores since April 2015.  Beer and cider on the aisles of Ontario supermarkets was first allowed in December 2015 breaking a long held monopoly on sales enjoyed for decades by The Beer Store and LCBO.

The number of B.C. grocery stores selling wine, cider and sake on their shelves is inching up, but the government’s process to reform alcohol sales has yet to bring wine to grocers in Vancouver and other large markets, including Burnaby and Richmond.

read more: renx

Still Ahead

Today

  • Pending Home Sales Index for October, 10 a.m. ET

Thursday

  • Construction Spending for October, 10 a.m. ET

Friday

  • Jobs Report for November 8:30 a.m. ET

Have a prosperous day!

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