Weekly News (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: $737,100←194th), Jackson Height (147^th: $548,000←236th), Elmhurst (146th: $550,300←232nd), Corona (159th: $530,200←237th), Pomonok (128th: $600,300←202nd)
According to New York University professor Mitchell Moss, Over flowing in East Village→Moved to Williamsburg→Moved to Bushwick / Ridgewood
Upper group: LIC Hunters Point (23rd←83rd), Brooklyn Greenpoint (36th←94th)

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 Average→5%)
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

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