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- 01/02/17--08:00: _The best city in ev...
- 01/03/17--18:00: _Trump's tax plan co...
- 01/03/17--18:49: _Australia's east co...
- 01/04/17--08:22: _See inside the $5.5...
- 01/04/17--14:17: _5 ways the housing ...
- 01/05/17--12:11: _See inside the $5.5...
- 01/05/17--16:36: _Renters can't keep ...
- 01/05/17--17:13: _Vancouver accidenta...
- 01/06/17--06:37: _'Shark Tank' star B...
- 01/06/17--07:31: _The New York Times ...
- 01/07/17--07:56: _A look inside the e...
- 01/09/17--07:29: _Just after Trump wo...
- 01/09/17--19:33: _Real estate all ove...
- 01/10/17--08:02: _This relatively unk...
- 01/10/17--12:00: _The 10 most afforda...
- 01/10/17--12:10: _7 billion-dollar me...
- 01/10/17--15:02: _Warren Buffett's Be...
- 01/11/17--09:37: _An anonymous buyer ...
- 01/11/17--14:17: _43 homes on the sam...
- 01/12/17--08:59: _A mystery buyer jus...
- 01/02/17--08:00: The best city in every state if you want to buy a home
- 01/03/17--18:00: Trump's tax plan could sink real estate prices
- 01/03/17--18:49: Australia's east coast has a ballooning oversupply of houses
- 01/04/17--14:17: 5 ways the housing market will be different in 2017
- 01/05/17--16:36: Renters can't keep up with Manhattan's office supply
- 01/10/17--12:00: The 10 most affordable housing markets in the US
- 01/11/17--14:17: 43 homes on the same Vancouver street just went up for sale
As every prospective homebuyer knows, there's a lot that goes into buying a new home beyond just its listing price. You have to ask yourself: Does this city have a strong education system? Is the neighborhood safe? How much will my property taxes be? Will my home become more valuable in the future when it's time to sell?
To help out those who are house hunting, GOBankingRates.com determined the best city to buy a home in every state, taking into account various factors, including school districts, property tax bills, home prices and incomes.
Whether you're looking to start a family or make money off investment property in the near future, check out our picks of the best places to live.
Methodology: In order to source list, GOBankingRates identified the three cities in each state with the best-ranked school districts, according to Niche. Then, GOBankingRates used the following factors to determine the best city in each state: 1) median property tax bill, sourced from the Tax Foundation; 2) median home listing price, sourced from Zillow; 3) median household income, 2010-2014 (in 2014 dollars) sourced from U.S. Census Bureau. Based on those three factors, the study selected the best city out of three cities for each state. States left out due to insufficient data include: Alaska, Montana and Hawaii.
Median property tax bill: $763
Median home listing price: $228,775
Median household income: $92,965
Madison is located in the Huntsville Metro Area, which has been experiencing economic prosperity due to its growing research, technology and manufacturing industries, according to Sperling's Best Places. In fact, Alabama as a whole is the best state for your money in 2017, according to another GOBankingRates study.
The median home value in Madison is $196,500, which is about $74,000 higher than the median home value in Alabama. According to Zillow, home values are expected to continue increasing in the Madison area.
Median property tax bill: $1,701
Median home listing price: $179,000
Median household income: $37,149
The housing bubble hit Arizona particularly hard, but some housing markets have rebounded. Home prices in Tucson are affordable, especially compared to prices in Phoenix ($250,000) and Scottsdale ($564,000). Take note, however, that incomes in Tucson are low. But, if you can find a higher-paying job in this city, your paycheck will likely stretch further.
Median property tax bill: $698
Median home listing price: $172,500
Median household income: $40,583
Jonesboro has a low median home listing price on top of relatively low property taxes. Memphis, Tenn., is actually located close to Jonesboro and boasts cheaper homes. However, homebuyers — especially families looking to settle in and start a new life — might be turned off by Memphis’ high crime rates.
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Could the election of Donald Trump have unanticipated impacts on the federal tax code’s benefits, which favor homeownership over renting?
To the extent that the House, Senate and White House soon will be under one party’s control, the answer may well be yes. Though housing issues got scant attention during the campaign, Trump’s tax reform plans, linked up with versions already proposed on Capitol Hill, could contain some jolts for many people.
Late in the campaign, Trump revised his earlier tax plans in ways that make it more compatible with House Republicans’ tax “blueprint” issued this past June. Trump would collapse the current seven tax brackets for individuals to just three: For married joint filers with incomes less than $75,000, the federal marginal tax rate would be 12 percent. For those with incomes of $75,000 but less than $225,000, the rate would be 25 percent. From $225,000 up, the rate for married joint filers would be 33 percent. Single-filer rates would have the same brackets but be based on incomes half the amounts for married joint filers. The capital gains rate would remain capped at 20 percent, and the controversial 3.8 percent “Obamacare” surtax on certain investment income would disappear.
Now it gets more intriguing: To simplify the tax system and wean more taxpayers from itemizing deductions on Schedule A of their returns, the Trump plan would boost the standard deduction for joint filers to $30,000 (up from the current $12,600) and raise it to $15,000 for single filers, instead of $6,300 at present. For very high income earners, there would be a limit on all itemized deductions of $200,000 for married joint filers and $100,000 for singles.
There’s no mention here of limits on mortgage interest deductions, so from strictly a homeowner or buyer perspective, nothing jumps out as objectionable. Simplicity is good. In fact, the original Trump tax plan exempted the mortgage interest and charitable deductions from the sorts of modest limitations contained in Hillary Clinton’s proposal.
But here’s a key question: With a substantially increased standard deduction of $15,000 to $30,000, how many homeowners will want to file for mortgage interest or property tax write-offs, as many do today. The chief economist of the National Association of Home Builders, Robert Dietz, estimated that the number of itemizers might drop from the current 25 percent of taxpayers to anywhere from just 5 percent to 10 percent.
Is that a problem? It depends on how one views the longtime tax code preferences for encouraging ownership of homes over renting. One analysis, provided by Evan M. Liddiard, senior federal tax policy representative for the National Association of Realtors, maintains that if the standard deduction is raised dramatically, “itemized deductions become less relevant,” and previously valuable and distinctive “tax incentives [for] homeownership evaporate even while taxes are not necessarily being reduced.” There’s less incentive to own rather than rent.
Dietz put it this way: When you decrease the attractiveness of a longtime subsidy devoted to encouraging purchases by lowering financing costs, “the economics would reduce the tax benefit for homeownership.” Such a change could “increase the after-tax cost of paying the mortgage,” he said.
Tax reformers see the issue starkly differently. Most comprehensive proposals that have been made in recent years, notably the landmark, bipartisan Simpson-Bowles National Commission on Fiscal Responsibility and Reform, call for wholesale elimination or sharp reductions of special interest carve-outs in the tax code.
But could limiting or ending homeownership tax preferences have the side effect of lowering home values and selling prices? Academic researchers suggest the answer is yes. A new paper from an economist at the Federal Reserve estimates that eliminating the mortgage interest deduction alone would cause the average household to lose
“10.9 percent of the value of the house, with homeowners losing 11.5 percent and homebuyers 8.5 percent.”
The Fed study did not address the type of tax plan contemplated by Trump or Capitol Hill reformers but appears to agree with the broad conclusion of earlier researchers: When you diminish the value of a subsidy benefit from a favored asset category, the value of that asset to potential buyers or owners is likely to drop.
None of this is happening yet. Months of committee hearings and debate — and lobbying — are guaranteed before any tax plan gets to the president’s desk. But it’s an indication of what’s on the line for real estate.
Investment in the Australian housing sector has become a frantic activity, and prices have soared. This has been accompanied by a construction boom, particularly of large multi-family developments. But that construction boom is now creating a ballooning oversupply “up and down the East Coast of Australia,” warns Roger Montgomery, Chief Investment Officer of Montgomery Investment Management in Australia, in the short video below, “Property Implosion?”
In Brisbane, for example, vacancy rates have doubled, and it’s going to get much, much worse. Prices and rents will get hit as developers try to unload their apartments (condos) and as property investors will sit on vacant units.
The construction industry is already responding to the oversupply: Project approvals are plunging, which means that down the road, construction activity will be plunging. Alas, 12% of all jobs in Australia are in construction, and “some portion of that 12% will have to look for jobs elsewhere.”
(When he talks about Brisbane’s “CBD,” he means Central Business District).
Ivanka Trump and Jared Kushner are officially packing their bags for Washington, DC.
The couple will reportedly live in a $5.5 million home in the Kalorama section of the capital city, The Washingtonian reported, citing real estate sources. It is unclear whether the Trump-Kushner family has leased or purchased the nearly 7,000-square-foot home, which has six bedrooms and last sold on December 22.
Kalorama is the same neighborhood the Obama family will reportedly inhabit once the president leaves office. The relatively small area is popular with politicians and DC insiders for its seclusion and privacy.
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The home was designed by architect Waddy Wood and built in 1923.
It was recently given a full renovation.
The home does not have much of a front yard, which is common for the neighborhood. It's close to the street, but the front door sits high with double steps leading up.
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The end of a year always has people wondering what the next will bring. And after a year like 2016 – with its political upsets, social uncertainty and international instability – many are desperately looking forward to a change in 2017.
Unlike other major points of discussion in the news, real estate maintained an overall positive trend throughout 2016, with home prices increasing 4.8 percent over the course of the year through November, according to real estate information site Zillow. Results from Zillow's most recent Home Price Expectations Survey of more than 100 economic and housing experts shows home values likely increasing by 3.6 percent in 2017 – continued growth, but slower than the past year.
Real estate functions in a cycle – both seasonally and over several years – and 2017 isn’t expected to break that pattern in any significant way. However, the year will most likely lead us into a new curve of the cycle, with higher interest rates supported by faster wage and job growth than recent years.
Many expect President-elect Donald Trump's administration to ease some lending restrictions, which would make it easier for lenders to issue mortgages, but nothing is certain in the lead-up to Inauguration Day. While we wait to see how policy changes may affect the real estate industry and homeownership, here are five things to expect from housing in 2017.
1. Interest rates will go up
And don’t hold your breath for them to go down in the foreseeable future. To properly follow inflation rates and support a positively functioning economy, interest rates have to tick upward, meaning we’re likely going to see an increase of as much as a full percentage point by the end of the year. On Dec. 14, the Federal Reserve increased interest rates by 25 basis points, with expectations to increase rates three more times by the end of 2017. Recent memory is filled with near-historically low interest rates, so any increase may seem like a big deal.
“It’s going to crimp some of those first-time homebuyers,” but negatively affect a relatively small group due to general economic growth, says Steve Rick, chief economist for CUNA Mutual Group, which builds financial products for credit unions nationwide.
Luxury real estate, where new property development has been largely focused following the recession, remains mostly unaffected by increasing mortgage rates, as the hikes aren’t significant enough to make a major impact.
“One thousand dollars for somebody who’s buying a $4 million apartment does not make a difference. It does make a difference to a $1 million buyer, because $290 [more in your mortgage payment] is your car, your school, your transportation costs or your monthly internet bill,” says Victoria Shtainer, a luxury real estate agent for Compass in New York City.
Those who should act fast to take advantage of current interest rates are homeowners with an adjustable rate mortgage. Rick suggests refinancing your mortgage to secure a fixed rate and avoid what’s expected to be at least three years of increasing interest rates.
“Even though [your rate] might be slightly higher now, in the long run you’ll be better [off],” Rick says. “Your rates by 2019 could be 2.5 percent higher than they are now, and nobody wants that.”
2. Cities will increase in density, leading to more buyers in the suburbs
Continuously growing property values means many homebuyers and renters will have to choose between prime location, space and affordability.
“When they’re looking for new homes, they want something they can afford, and oftentimes that means settling for something that’s a little bit smaller,” says Svenja Gudell, Zillow’s chief economist.
Zillow predicts development in cities will remain focused around key points for public transportation, and as a result of limited space, this will create denser housing options in city settings.
But as prices continue to climb in those already pricey urban centers, millennials– who Gudell expects to be the largest buyer group in 2017 – are likely to look to the suburbs for more affordable alternatives.
3. New development will ease demand
Low inventory of available housing has been a key factor in the rapidly increasing housing costs following the recession, but the coming year should bring some easing of that demand. The National Association of Home Builders predicts 1.24 million housing starts in 2017, compared to the projected 1.16 million starts in 2016.
New development for multifamily housing, including apartments and condominiums, also remains high. “New apartments are hitting the market all the time, and that’s easing some of the supply constraints we’ve seen. It’s going to make rents grow at a slower pace,” Gudell says.
Shtainer notes she has finally begun seeing more properties coming to the market in New York at a slightly more affordable price because many are one-bedroom apartments. Still, she says smaller units are in such high demand that they get snapped up quickly.
“Most of the products like that get eaten up and digested quickly because we haven’t had that product in a long time, because the majority of development was three bedrooms, $15 million and up and super-luxury,” Shtainer says.
Luxury residential development is still expected throughout the U.S. But with slowing demand, prices likely won't increase at the same pace they have over the last few years.
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Ivanka Trump and Jared Kushner are reportedly moving into the Kalorama neighborhood of Washington, DC, and may be in the same neighborhood as the Obamas once they leave office.
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Tenants gobbled up more than 33 million square feet of Manhattan office space in 2016, pushing leasing activity up 5.5 percent year-over-year, according to a new report from Colliers International. But even as large chunks of new supply came online, many big tenants chose to renew their leases and stay put, resulting in the market seeing negative absorption for the first time since 2009.
Demand was strong last year, with WeWork on a tear signing roughly 800,000 square feet of new leases and expansions and Swiss bank UBS renewing 900,000 square feet at RXR Realty’s1285 Sixth Avenue, Colliers data show.
In fact, the 33.1 million square feet leased in 2016 was the third-highest total in the past 10 years, behind 37.38 million square feet in 2014 and the 33.92 million square feet leased in 2013.
But the four largest deals of 2016 were either renewals or sale-leasebacks. And even as tenants signed leases for new spaces in new buildings on the Far West Side and in Lower Manhattan, demand wasn’t able to keep pace with the available supply.
Net absorption for the year was negative 3.79 million square feet, according to Colliers. That was the first full year of negative absorption since 2009, when the figure dropped to negative 10.07 million square feet in the depths of the Great Recession.
The weak performance back then was driven by anemic demand and high sublet space. Now, the market’s fundamentals are far more robust, but Joseph Harbert, Colliers president for the Eastern Region, said that in 2017 there “will be significant pockets of opportunity for value-conscious tenants in the Manhattan market.”
The average asking rent in Manhattan was $73.24 per square foot at the end of 2016, up from $71.50 a foot the previous year.
Don’t you just hate when you insert the name of the wrong company in a contract at work? And isn’t it the worst when the company you accidentally inserted is also the branch of a communist government that purchases real estate for the purposes of stabilizing their currency? Never happened to you at work? Strange, because the City of Vancouver did the same thing and brushed it off like it was normal. According to investigative journalist Christopher Wilson, a review of a controversial land swap deal in Vancouver stated that China’s state investment firm was accidentally inserted in a contract, and the city is claiming it was an honest mistake.
The Land Swap Deal
In 2012 the city engaged in a land swap deal that was considered controversial. The drama can (and has) filled a courtroom with details, but the gist of it is that the city swapped land at 508 Helmcken Street assessed at $15 million dollars, for land a developer had on 1099 Richards Street assessed at $8.4 million. Today the 508 Helmcken Street property has an assessed value of $130,024,800, and the Richards Street property has an assessed value of $2. To be fair, the Richards Street property was assessed at $21,208,000 in 2016, but the point being it wasn’t exactly a straight trade.
Turns out New Yaletown residents didn’t see it as an even swap. The association took the city to court, where they ruled the process of vetting the deal inadequate. The city then hired Ernest and Young to conduct an independent audit at a cost of $170,000. The roughly ~$2,000 a page report had a curious line that stated “It is acknowledged by EY that reports may be provided to China Investment Corp, which disclosure shall be subject to the prior consent of EY, which consent shall not be unreasonably withheld.”
What Is A Sovereign Wealth Fund?
Unless you’re a finance or politics nerd, you probably have never heard of the China Investment Corporation (CIC). CIC is the sovereign wealth fund that manages a portion of the excess foreign exchange reserves of China. In their own words, they “are a financial investment firm that acts on behalf of the State, and manages real estate investments.”
Now, sovereign wealth funds aren’t a problem by themselves. They’re basically just investment firms, so it’s as good as the intentions of the investors themselves. When those intentions aren’t clear however, it can become a little sticky. The US government in particular has expressed concerns about the CIC’s strategic purposes.
Testimony presented to the US Senate noted“export engines like China are using sovereign wealth funds to keep their currencies from appreciating too quickly.” The notes prepared by professor Daniel W. Drezner go on to say “As many economists have observed, these countries are simply converting assets extracted from the earth into a more liquid form. Second, by focusing on foreign direct investment, these governments are attempting to forestall the Dutch disease of rapidly appreciating currencies. Overseas investment via sovereign wealth funds can accomplish both tasks simultaneously.”
A little known US Senator named Hillary Clinton presented concerns when testifying before the US-China Economic and Security Review Commission in February 2008. “You know, you cannot get tough with your banker. You cannot stand up if they have very different interests in the Middle East or in Asia than we do and they basically say, fine, you want us to dump dollars? Do you want us to pull our investments out?” said former Senator Clinton. The annual report to Congress summarizing the testimony noted“There is concern that the Chinese government can hide its ownership of U.S. companies by using stakes in private equity vehicles like hedge or investment funds.”
Clearly some very smart people think it can bring a lot of issues, and transparency is paramount when dealing with sovereign wealth funds.
Whoops…It Was An Accident!
You know how there’s a whole process to vet contracts, to ensure that mistakes don’t just slip in? Well, apparently it’s not super effective in its current form. Wilson questioned the city and EY to find out why the CIC was named in the contract:
Kevin Brennan, Senior Vice President at Ernst Young told Wilson:
“I think what happened was that I likely had more than one engagement letter open on my computer and inserted that clause into the wrong one.”
Francie Connell, Director of Legal Services for the City of Vancouver said:
“It was entirely inadvertent. I knew nothing of that corporation, we knew nothing of that corporation. It was a simple drafting error which we very much regret, but it was an error.”
I could have guessed what Mayor Gregor Robertson was going to say, but here it is for breadth:
“I’m not familiar with the specific issue.”
No Need To Look Into It
So there we have it. The senior vice president at EY was looking at a contract from the CIC (fun fact, CIC apparently closed their Canadian operations almost two years ago). He “inserted that clause into the wrong one [document],” and the city’s lawyers “knew nothing of that corporation” and left it in the contract. Despite the odd situation, the issue is considered dealt with since it was a simple mistake in their opinion. No independent audit – we’ll just take the word of the people involved that it was a “simple drafting error.” Case closed. Heck, the city doesn’t even feel the need to answer Wilson’s other questions that were brought up after this situation.
Oh yeah, and the land swap was appealed and went through anyway.
"Shark Tank" co-host Barbara Corcoran took a big risk quitting her waitressing job in New Jersey to become a real estate broker in New York City. She had no money or connections, but her gut told her to go, so she did. This is the philosophy that has made her a huge success.
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Mott Haven, Port Morris, the Piano District, or the South Bronx. No matter what you call it, the area is now a great place to visit from all over, according to The New York Times.
The southernmost tip of New York City's northern borough has been named 51st in a list of 52 "places to go in 2017." Long plagued by crime and other social ills, the South Bronx is a neighborhood where "things are turning around," the Times wrote, citing signs of gentrification.
Artisanal coffee shops, art galleries, boutiques, and notable restaurant openings are all evidence the Times uses to call the South Bronx a desirable place to visit, in the same vein as Madagascar (19) and Budapest (50).
The South Bronx is mainly an industrial area that's been called on the verge of "revival" since at least 2013. Real estate developers and agents have taken to calling it the "Piano District" in listings and advertisements in order to entice prospective residents who might be turned off by the South Bronx name.
With all of this attention, gentrification could now be a concern in the South Bronx. Median rents for a one-bedroom apartment rose 46% from 2013 to 2016, and in August 2016, they reached $1,700 in Mott Haven, real estate startup Neighborhoodxtold Gothamist.
The Times notes that crime is still a problem for the neighborhood, though crime rates in the South Bronx (and the rest of New York City) have fallen sharply since the '90s.
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As Trump's administration starts to make its way into Washington, a lot of things are still up in the air.
And though the chips will fall as they may, a lot of them will probably fall in Kalorama Heights, a small residential enclave in the northwest part of Washington, DC's central urban area.
The small neighborhood will be home to the Obama family, who will move into a $5.3 million home after the president's term ends later this month. Ivanka Trump and Jared Kushner will also be moving into a $5.5 million home just a few blocks away in the same neighborhood.
But Kalorama's desirability is not a new phenomenon.
"Kalorama Heights ... has always been a very luxury high-end neighborhood," Patrick Chauvin, executive vice president and senior advisor for Compass, told Business Insider. Chauvin is a 25-year veteran in the real estate market, and has sold many of DC's priciest homes. "It was one of the more urban neighborhoods, so to speak, back in the 1800s."
It was also a common area for presidents to live — both William Howard Taft and Woodrow Wilson owned homes in Kalorama Heights.
Kalorama is one of the most expensive neighborhoods in DC. According to public data assembled on Trulia, the median sale price for all homes in Kalorama was $1.395 million between October 2016 and January 2017. The median sale price for Washington, DC, as a whole for that period was $635,000.
Chauvin said that many members of the new Trump administration, many of whom are wealthier than their predecessors in addition to being less entrenched in DC society, are looking in Kalorama as well as the similarly ritzy Massachusetts Avenue Heights neighborhood that borders it.
Trump's team of top officials and advisers have a combined net worth of at least $10 billion. Some of Trump's wealthiest picks for key positions include Betsy DeVos, his choice for secretary of education, worth $5.1 billion, and Wilbur Ross, the nominated secretary of commerce, who is worth $2.5 billion. Trump has also tapped ExxonMobil CEO Rex Tillerson, worth at least $228 million, to be secretary of state. Steve Mnuchin, Trump's pick for Treasury secretary, is worth at least $100 million, according to estimates.
Mnuchin recently purchased a home in Massachusetts Avenue Heights, the Washingtonian reported this week. The homes in Massachusetts Avenue Heights and Kalorama are desirable for different reasons, Chauvin says, but they share the benefit of being very close to Downtown.
"The big difference is that Massachusetts Avenue Heights has larger homes on bigger lots with more green," Chauvin said. "Kalorama Heights has large homes with grand entertaining spaces, as most of the homes were built in the earlier years, but on smaller lots."
Those smaller lots in Kalorama have the advantage of requiring less maintenance, and they have a shorter walking distance to shops and restaurants.
As for the prospect of Secret Service activity disrupting these neighborhoods, Chauvin said that likely won't be any more of an issue than it already is.
"All of the neighborhoods mentioned ... already have some sort of Secret Service in them," Chauvin said, noting that even his own building has a Secret Service presence.
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Anbang Insurance is the shadowy Chinese financial behemoth that has been buying up assets in the US at breathtaking speed.
In 2014, for example, it acquired the Waldorf Astoria, and last year it attempted to buy Starwood Worldwide.
The chairman of the company, Wu Xiaohui, is married to former Chinese President Deng Xiaopeng's granddaughter.
Jared Kushner is president-elect Donald Trump's son-in-law and a real estate investor in his own right, as chief executive of his multibillion dollar family firm, Kushner Companies.
According to the New York Times, the two parties met on November 16, just after Kushner's father-in-law clinched the presidency, to toast what that would mean for global business — an interesting toast given Trump's vitriolic rhetoric against China.
Mr. Wu and Mr. Kushner — who is married to Mr. Trump’s daughter Ivanka and is one of his closest advisers — were nearing agreement on a joint venture in Manhattan: the redevelopment of 666 Fifth Avenue, the fading crown jewel of the Kushner family real-estate empire. Anbang, which has close ties to the Chinese state, has seen its aggressive efforts to buy up hotels in the United States slowed amid concerns raised by Obama administration officials who review foreign investments for national security risk.
In China, the separation between business and politics is almost non-existent. To be a billionaire executive is to also be part of the party cadre, and to have the blessing of those in power.
This report is a bit of a longer read, but it's an important one. It highlights a couple of things we know — that Kushner is trying to find a creative way to adhere to ethics rules to serve in his father-in-laws administration, and that he has business relationships to those connected to the highest levels of the Chinese government.
And it highlights what we don't know — which is how extensive those relationships are. One Kushner project, a Trump building that opened in New Jersey in November, got as much as $50 million worth of financing from Chinese investors. The investors were part of a federal program that has come under scrutiny from Congress recently. It grants two year visas and a path to permanent residency for those who invest $500,000. It's called EB-5.
Property prices across the globe have benefitted from the demand of foreign buyers, a.k.a. China’s capital outflows. 2017 is about to find out how those markets will fare without them. China has issued unexpected rules on exchanging yuan for international currency. This will likely impact real estate around the world.
China Moves To Stop Outflows
The new rules now require disclosure of the intended use of the yuan being converted. In addition, they must pledge the money won’t be used for the purchase of property, securities, or insurance products. Borrowing or lending on behalf of others is now prohibited, and now requires a legal declaration saying you aren’t. Anyone caught breaking the rules will be denied the conversion, and lose exchange rights for 2 more years. They can also be subject to an anti-money laundering investigation, something most people would like to avoid.
For those that don’t know, China’s currency isn’t freely convertible on the open market. In order for yuan to be used internationally, the People’s Bank of China purchases foreign currency and provides liquidity for yuan holders. Each Chinese citizen can trade up to US$50,000 per year, and only that much can leave the country.
Despite the rules, one measure of capital outflow from the State Administration of Foreign Exchange (SAFE) shows ~US$1 trillion dollars worth of yuan were removed from the foreign exchange reserves from the 2014 peak to November 2016. To put that in perspective, the whole GDP of Canada in 2016 is estimated to be just US$1.29 trillion.
Foreign Buyers And Global Real Estate
It’s no coincidence global property prices boomed the same time outflows accelerated. In 2014, rumors began circulating that the yuan would no longer be pegged to US dollars. Shortly after, property prices began surging. In December 2015, China announced their intention to loosen the peg against the US dollar, making it official. Property prices surged in Canada, the UK, New Zealand, and Australia, all countries with low barriers to importing large amounts of capital, and liquid currencies.
Obviously not all purchases in these countries were yuan-based investors looking to secure inflationary hedges against their capital. It did however add demand, which saw many locals in those countries competing with international investors. Hard numbers are lacking in most countries, but China’s largest foreign real estate portal Juwai generated over $14.9 billion dollars in Canadian sales leads in just 2015. Whether you agree with foreign buyers or not, they do exist and they are a significant driver of markets.
Impact On Global Real Estate Markets
So what happens now that the party might be over? Global markets will likely see a cooldown due to the new restrictions and barriers in China. There are however, a few factors that throw some major curveballs to 2017. The most important being China’s underground banks, and property liquidity.
China has a massive underground banking market, and it’s bigger than most experts thought. The industry operates in the shadows, but still does billions of yuan in business. In August 2016, the Chinese government shut down one operation in Shenzhen handling 40 billion yuan (US$5 billion). The same report also notes an operation on the border of Vietnam that handled 28 billion yuan (US$4 billion) in just 9 months. No one’s sure how many more exist, but the use of these banks could accelerate if the yuan devalues substantially. This would provide a positive data point for home prices.
Conversely, property liquidity should be considered too, which could force prices down. Some people purchased homes in a process called smurfing– where large amounts of money are broken down into small undetectable amounts. Homes are an easy way to reassemble the money into a single house-shaped bank account. However, you need to sell the home to retrieve the money.
While it sounds sketchy, it isn’t. Most people that do this are just looking for a way to hedge against any devaluation their hard-earned money might experience as a result of a major currency change. It does present a problem for domestic investors though. If a large number of people smurfing require their money soon, they’ll have to sell. This will provide downward pressure.
Since most countries don’t track foreign ownership of residential real estate, there’s little data to predict how much of an impact it will have. However, companies like Juwai have demonstrated that the number is higher than most governments are willing to admit. Only time will tell if domestic buyers continue to push the trend without Chinese yuan-hedge bets.
Every winter, the small town of Wellington, in southeast Florida, experiences a tremendous influx of some of the wealthiest people in the world.
From the Springsteens to the Bloombergs, to the families of Steve Jobs and Bill Gates, to Arab sheikhs and South American billionaires, it's a congregation of people with spectacular quantities of money.
No, they aren't gathering for some sort of business affair. They're coming for WEF: the Winter Equestrian Festival, which takes place every year from January to April on the hallowed grounds of the Palm Beach International Equestrian Center. The 12-week WEF has been the longest equestrian event of its kind for several years running, and it attracts riders at all levels of the sport.
Because of the costly nature of all things equestrian, it's no surprise that rich people and horses go hand in hand. But while some wealthy riders and owners are just in it for the glamour and prestige, some — like Georgina Bloomberg and Jessica Springsteen — are serious and successful competitors.
As WEF has grown over the years, it has turned Wellington into a winter oasis for the upper crust, who come to ride, mingle, and bask in the warm weather. But while the human amenities are nothing to sneeze at, the real luxuries are reserved for the horses. Here's an inside look at this star-studded fantasy world, where celebrities come to play and their four-legged companions reign supreme.
Brittany Kriegstein contributed reporting to an earlier version of this article.
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Wellington, Florida, is a community of about 60,000 people in southeast Florida, about 15 miles west of West Palm Beach.
Without a doubt, horses rule in Wellington.
Many roads and neighborhoods are equestrian-themed.
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Buying a four-bedroom home and living in a major city are often considered mutually exclusive. But they don't have to be.
Coldwell Banker recently released its annual Home Listing Report, which tracks the most affordable real estate markets in the US. Each of the top 10 are either in major cities or within commuting distance of a major metropolis, including Detroit and Cleveland at No. 1 and No. 2, respectively.
To determine the most affordable cities, Coldwell Banker analyzed the average listing price of more than 50,000 four-bedroom, two-bathroom homes for the period between January 2016 and June 2016. The ranking covered 2,168 markets across the US, excluding any with fewer than 10 listings.
In Detroit, a four-bed, two-bathroom house only costs around $64,110. And despite the city's notorious decline — which led to it ultimately filing for bankruptcy in 2013 — it's on an upswing. Detroit's small business scene is booming, creating jobs and revitalizing the town.
Keep reading for the cheapest places to purchase a home in the US.
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10. Palatka, Florida
Average cost of a 4-bedroom, 2-bathroom house: $110,655
Median household income: $21,864
9. Augusta, Georgia
Average cost of a 4-bedroom, 2-bathroom house: $106,567
Median household income: $37,593
8. Huntington, Indiana
Average cost of a 4-bedroom, 2-bathroom house: $105,614
Median household income: $39,542
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New York City has a number of ambitious development and infrastructure projects underway.
Manhattan's most recent transportation upgrade came in the form of the glistening, $4.5 billion Second Avenue subway line, which opened on January 1.
On the other side of the island, Hudson Yards — the most expensive real estate development in American history— is under construction. And on an island in the East River, Cornell University is building a glassy tech campus with classrooms, a hotel, restaurants, and shops for future graduate students. By the middle of this century, the city will look different, and will likely attract even more new residents and tourists than today.
From Manhattan to Brooklyn, here is a look at some of the most substantial projects set to be completed in the next two decades.
The World Trade Center site
Since the September 11 attacks, New York City has been working to redevelop the 16-acre Manhattan site where the Twin Towers and surrounding buildings stood.
As of January, 2017, 1 World Trade Center (also known as the Freedom Tower, the tallest skyscraper in the city), 4 World Trade Center, 7 World Trade Center, a new transit hub, the 9/11 memorial and museum, a mall, and a park are all complete. Two more towers, a small church, and a performing arts center are still in the works. Construction is set to be finished by 2020.
Located on Manhattan's Lower East Side, Essex Crossing will feature 1,000 apartments available to low-, moderate-, and middle-income residents.
The $1.1 billion development will also include a Regal movie theater, a new street market, a bowling alley, and a cultural space.
The once-abandoned site, which features many parking lots today, is the result of a failed 1960s urban renewal scheme by mid-century developer Robert Moses. Construction of Essex Crossing began in 2015 and is set to be complete by 2024.
Cornell Tech Campus
Cornell, the Ivy League university located in Ithaca, New York, is building a new campus that will dominate NYC's Roosevelt Island.
The development, which will feature dorms, offices, classroom buildings, restaurants, and a hotel, will span 2 million square feet.
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Undaunted by the cutthroat residential brokerage game in New York City, Berkshire Hathaway HomeServices opened its first office in the city this week.
Ellie Johnson, the longtime former senior vice president and manager of the Upper East Side sales office at Sotheby’s International Realty, is leading Berkshire Hathaway HomeServices foray into New York City, the company announced Monday.
The New York City operation is the latest step in the company’s “strategic expansion” in the northeast. Over the past two years, Berkshire Hathaway has been establishing a presence in Westchester County by acquiring brokerages in Scarsdale, Larchmont, Eastchester and Rye.
Johnson, who resigned from Sotheby’s last September, said the brokerage now has five brokers and will continue to recruit. The team is focusing exclusively on the residential market, but Johnson said the company will eventually expand into commercial real estate.
The team already has exclusive listings in the city, according to Johnson, and is operating in Manhattan and some neighborhoods in Brooklyn. She did not immediately provide the exclusive listings or state what the firm was targeting in terms of sales volume or agent counts. The firm’s new office is on the 37th floor of 590 Madison Avenue.
“We might be new in New York City, but the brand is globally known and well established across the country,” said Johnson. “When you mention Berkshire Hathaway, the first thing people think of is Warren Buffett.”
But the power of the Berkshire Hathaway name might not mean much in a notoriously brutal Manhattan market that’s long been dominated by established brokerages with strong neighborhood ties.
“Coming in with William Raveis, which is a huge force, it was not a slam dunk in Manhattan,” said Paul Purcell, the managing director of William Raveis’ New York City office. “[Manhattan] does not respond to firms that are everywhere else in America. We’re not a Coldwell town or a Century 21 town. When you say Berkshire Hathaway, that’s not going to be exciting to a broker or a consumer.”
In 2014, William Raveis opened in Manhattan, but the firm quickly encountered trouble. It lost big name recruits and was forced to put the brakes on a plan to launch a new development division.
Other out-of-town companies have also struggled to gain traction in the Big Apple, including U.K.-based Foxtons, and Coldwell Banker, whose attempts to affiliate with Bellmarc ended in litigation.
Still, Johnson said she’s not concerned about the brokerage’s ability to take on Douglas Elliman, Corcoran and everybody else.
“I welcome competition and I thrive in it,” she said. “There’s enough for all of us. I don’t need to take somebody’s business. We all bring something to the table.”
The first blockbuster home sale of 2017 is here, and it's a doozy.
A newly constructed, nearly 8,000-square-foot mansion in the well-heeled Southern District of Hong Kong has found a buyer. The asking price was $670 million HK — nearly $86 million US — though its unclear what the house sold for exactly.
The buyer has not been named. Raymond Ho, the deputy senior director of residential development and investment at real estate firm Savills, which brokered the deal, referred to them as "an experienced buyer from Hong Kong"and told Bloomberg they paid no tax on the sale.
The buyer was reportedly able to use a well-known loophole in Hong Kong law to dodge a property tax in the purchase. Essentially, all that needs to be done to avoid paying tax is to purchase the property through a shell company registered offshore — an already common practice for wealthy buyers purchasing ultra high-end property around the world. In this case, the buyer avoided paying a 15% tax of $100.5 million HK (about $13 million USD), using an LLC with a name similar to the house's address.
The law has contributed to making Hong Kong one of the least affordable cities in the world. In November 2016, its government took steps to change the law by imposing a 15% tax on transactions by people who are not first-time buyers in the area.
Over the past few days, a number of homes have begun listing – all in the same area of Vancouver. The curious move now makes a little more sense, real estate agents have convinced 43 homeowners on the same street to list their homes for sale. The deal is being pitched as land assemblies, for a developer to buy multiple strips of land in the area. The buyer will likely need to be deep pocketed, and politically connected however – there’s an up to 80% premium on the land, and it’ll need to be rezoned to likely make a profit.
Where Is This?
The prime strips of land are on East Broadway, between Nanaimo Street and Rupert Street. Multiple agents and brokerages are involved in the deal, and are hoping the sellers hold out for a developer. They’re all priced in the $2 million to $3.3 million range, just a tad over the assessed value.
The plot of land east of Kaslo on East Broadway is one of the more readily available pieces pieces of land for sale. 11 of the 13 homes on the strip are currently listed for sale, but it’s unclear if the other 2 are scheduled to go on sale. The homes vary in size and style, but they all went with a $3.3 million price tag. All 13 homes have a combined assessment value just over $20 million, but the 11 listed have a combined ask $36 million. That’s an 80% premium in case you were just going to do the math.
Zoning And Rezoning
The agents are targeting a deep pocketed buyer, and not just because of the premium on the property. Re-zoning restrictions will likely prevent the developer from just building a luxury condo. As the city densifies, the rules will likely evolve going forward. So the potential buyer will have to wait out the city’s current rules. How long that will take is anyone’s guess, but carrying the property in the meantime won’t be cheap.
A deal of this size will likely take a while, since the cost and ability to zone will take some homework. It will be an interesting benchmark for Vancouver real estate however. Land’s only worth what someone is willing to pay for it, so if a developer thinks there’s a little more steam in redeveloping single-family detached homes, there might be a few more speculators that jump into the market.
A mystery buyer just scooped up one of 432 Park Avenue’s priciest penthouses for $65.6 million — the second-highest price paid to date for a pad at the luxury tower.
The buyer of Unit 85 — identified as Parklight LLC — went into contract on the full-floor spread in April 2013, according to public records. Haroon Hamid was an "authorized" signatory on the deed.
Since closings began in late 2015, the Rafael Vinoly-designed tower, developed by Macklowe Properties and CIM Group, has racked up a spate of big-ticket sales.
Saudi retail magnate Fawaz Al Hokair reportedly closed on the building's $87.7 million penthouse in September for over $10,600 per square foot (though he received a generous $56 million loan from CIM Group), and five units at 432 Park were among the top 10 priciest residential sales of 2016.
Unit 85, a full-floor residence with five bedrooms, a library and wood-burning fireplace, sold for $8,144 per square foot, a premium for the building. Lew Sanders, the former CEO of asset manager AllianceBernstein, forked over $60.89 million, or just under $7,600 per foot, for Unit 88 last year. And a Los Angeles-based corporation, 432 Crotona Park Avenue LLC, plunked down $59.1 million, or $7,337 per foot, for Unit 79.