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 (147th: $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 

  • 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

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