June 27, 2018

1. Trulia reported Top 10 in New York area for highest house price increase

  • #1: Brooklyn Bushwick (90th in 2018←189th in 2008): Median price→$788,700
  • Queens Ridgewood (99th: $737,100194th), Jackson Height (147th: $548,000236th), Elmhurst (146th: $550,300232nd), Corona (159th: $530,200237th), Pomonok (128th: $600,300202nd)
  • According to New York University professor Mitchell Moss, Over flowing in East VillageMoved to WilliamsburgMoved to Bushwick / Ridgewood
  • Upper group: LIC Hunters Point (23rd83rd), Brooklyn Greenpoint (36th94th)

2. Rent under Rent Control low in NY will be raised again

  • 969,000 units are under rent control in NYC : 2.5 Million live in these units
  • RGB decided 1.5% for 1 year lease and 2.5% for 2 year lease during 2018~2019
  • Apartment owners insisted 4% for 1 year and 7% for 2 year lease before this decision
  • Biggest increase for last 4 years

3. Miami, Florida will have biggest Super Shopping/Entertainment mall complex 

  • Total 6.2 Million SF / Development cost: $4 Billion→'American Dream Miami'
  • Population increased by 10.2% between April 2010 and July 2017 (US Average5%)
  • According to Wall Street Journal, the plan got approval from Dade county→Will move to environmental test
  • Developer: Triple Five (Canadian Company) Same as American Dream Meadowland in NJ
  • Shopping Center, 2,000 room hotel, Indoor Sky, Ice wall, Water park with Submarine Lake, etc.
  • 25,000 jobs will be created / 30 Million tourists expected
  • Triple Five will open American Dream Meadowland in 2019

4. Trump’s Trade War triggers selling US Treasury bonds 

  • Many countries counter attack US indirectly – reducing their owning US Treasury bonds.
  • According to CNBC, In March, April, they have sold $47.6 Billion of Treasury bonds
  • Biggest reduction has done by Russia (In beginning of March: $96.1 Billion End of April: $48.7 Billion)   
  • China, Japan, Ireland, Swiss, Luxemburg, Hong Kong also reducing US bonds
  • Total Treasury bond: $16.2307 Trillion 38% owned by foreign countries Helped US financial trouble If US Treasury bond diet US will be more difficult to borrow money
  • Bond demand reduced Bond interest rate will be increased Already over 3%,
  • Harley Davidson’s (Based in Wisconsin: Paul Ryan’s district) partial factory moves to overseas in order to avoid EU’s counter tariff due to Trump’s US tariff
  • EU’s tariff was 6% 31% as of 22nd ($2200 raised per auto-bike)
  • EU’s market shore is about 16%

5. NAR Annual Conference reveals price hike will stop around 2020 

  • Focus Long term economy boom (Over 8 years) will continue or not
  • According to CoreLogic Chief economist, Frank Nothaft, More than a half of economists mentioned recession in 2020 / 30% mentioned recessio0n in 2021 or later
  • Buyer will face high price, low inventory, interest rate increase, less tax benefit
  • High interest rate and 6.9% increased house price Mortgage burden increased by 16%
  • Yet, it is not called 'Bubble' because only 32% of big cities was evaluated 10% over priced (67% was over priced in 2006)
  • NAHB sees good future because strong demand Highest forecast for recent 20 years
    Difficult to meet the strong demand because of increased material cost, low labor force, tough regulations  

6. US Home prices rose in April from a year ago 

  • Buyers fight over low supply
  • S&P CoreLogic Case-Shiller 20-City index Up 6.6% from a year ago
  • Prices rose even homes sales down and mortgage interests up
  • Existing home sales dropped in April and May by 3% below their a year-ago level
  • The supply has fallen 6.1% in the past year
  • house for sale remained on the market for 26 days (39 days a year ago)

7. Chinese investment reduced by 92% 

  • According to CNBC, Investment from China during Jan to May 2018 was reduced by 92% to $1.8 Billion, compared to last year
  • Considering sale off Chinese assets in US, Total investment is negative $7.8 Billion
  • Reason: China government control and US government regulation (limited investment form countries who might be involved with technology transfer)
  • China investment was peak at 2016: $46 Billion $29 Billion last year

8. One person LLC will save tax for rental investment 

  • New Tax law: 20% of Pass Through company’s income will be deducted.
  • Many people are busy to set up LLC to receive this benefit
  • Example: Company profit: $100,000, $20,000 will be deducted Tax on only $80,000
  • AirBNB owner LLC 20% deduction on income / Not affected by SALT $10,000 limit and Mortgage interest deduction limit (Over $750,000 loan)
  • LLC: Tax reported by individual tax return schedule C or E
  • One issue needed to be addressed It might affect social security tax and Medicare tax duty