National Cheat Sheet: Home Builders Association knocks Trump tax bill, houses across U.S. selling at fastest clip in 30 years … & more

Nov.November 03, 2017 08:30 AM

Clockwise from left: A home in Lennar’s new Arden development in Wellington, Fl., Green-Wood Cemetery, flooding in Miami.

Trump tax reform opposed by National Association of Home Builders

The National Association of Home Builders (NAHB) gave a thumbs-down response to President Trump’s tax reform proposal this week. That’s because tax credits for mortgage interest and state property taxes are not a part of the bill, Curbed reported. The organization warned that removing these established incentives for buying a home would be harmful to the housing market. NAHB chairman Granger MacDonald called the plan “particularly disappointing” and said it would “severely diminish the effectiveness of the mortgage interest deduction.” President Trump’s plan would double the standard deduction, and the expectation is that more people would choose this route over itemized deductions such as the mortgage interest deduction. [Curbed]

Homes in the U.S. selling at fastest rate in 30 years

A lack of inventory across the U.S. is having an historic impact on the length of time homes are lingering on the market. Homes are now selling at their fastest rate in 30 years, according to a report by the National Association of Realtors cited by Bloomberg. Homes were marketed for just three weeks in the year ended in June, the report said, down from four weeks in the year-ago period. It’s the fastest pace since NAR started tracking the metric in 1987. Inventory declined in September, the 28th consecutive month of year-over-year drops in the number of homes for sale. [Bloomberg]

Number of home owners rises in the U.S., signaling a trend

High prices and low inventory have not dampened the rate of U.S. home ownership, which has ticked up in recent months. In the third quarter of 2017, 63.9 percent of U.S. adults owned a home, a slight increase from last year’s 63.5 percent, according to the Wall Street Journal, which cited U.S. Census Bureau statistics. The increase marks the second consecutive quarterly increase. Svenja Gudell, chief economist at Zillow, told the WSJ that the rise is a positive indicator for “trying to get renters into homes” but not as high as expected considering country’s increase in jobs and low mortgage rates. [TRD]

Lennar to acquire CalAtlantic for $5.7B, creating largest U.S. homebuilder

There’s a new heavyweight in the homebuilding industry. The merger of Lennar Corporation with CalAtlantic Group in a $5.7 billion deal announced this week means the new entity will be the largest homebuilder in the U.S., The Real Deal reported. Miami-based Lennar will also assume $3.6 billion of debt in the deal, making the purchase price a total of $9.3 billion. Lennar and CalAtlantic recorded revenues of more than $17 billion combined last year. The new entity will be in charge of 240,000 home sites and 1,300 communities in 49 markets across 21 states. [TRD]

Lack of space in city cemeteries threatens the “forever home” market

There’s another inventory squeeze going on across the nation, albeit underground. Urban cemeteries are filling up and may run out of space in the future, according to Bisnow, which highlighted the difficulties of creating new space to bury the dead in urban centers as baby boomers grow old. According to the report, Arlington National Cemetery is expected to run out of room by 2041. Gene Adamo, vice president of the historic Green-Wood Cemetery in Brooklyn, said within the next decade the cemetery may have no more single graves for sale. “Unfortunately, a lot of cemeteries will come to that point,” Adamo told the site. The cost and availability of land in major cities plus a dose of NIMBYism are seen as preventing new cemeteries from being created. [Bisnow]

Major Market News

The new math: private school construction in NYC adds up to $1B

Upgrades to private schools in New York City — often to add fancy amenities like a new gym or pool or expand into a larger space — have surged to nearly $1 billion. Construction and renovation starts for private K-12 schools was over $948 million from January 2014 to this past September, about two and half times the starts for the four-year period ended a decade ago, the Wall Street Journal reported, citing data from Dodge Data & Analytics. The growth in construction for private schools is due in part to low-interest rates and higher enrollment, according to the WSJ. But competition for prospective students is another factor. As private-school parent Amy Poeppel, author of “Small Admissions,” told the Journal, “Shiny spaces matter to New Yorkers.” [TRD]

Climate change may impact lending for Miami’s commercial real estate projects

Bank financing for commercial real estate projects may shift in response to environmental threats. Climate change and rising seas in particular are already causing banks to scrutinize projects and be more conservative with their level of commitment, according to Veronica Birch Flores, executive vice president with First National Bank of South Miami, who spoke during a panel discussion this week, The Real Deal reported. “How municipalities deal with rising seas and the impact on coastal properties is something we are being more careful about,” she said. For example, municipalities like Miami Beach, which is investing in flood-prevention projects, are better positioned than areas that are not dealing with the threats of global warming, she said. [TRD]

Two LA developers fighting affordable housing rules will not get their day in court

Two West Hollywood developers who oppose a California law requiring developers to subsidize affordable housing will not have their appeal heard by the Supreme Court. The Los Angeles Times reported that as part of the permit process for an 11-unit condo project at 616 N. Croft Avenue, developers Jonathan and Shelah Lehrer-Graiwer were required to pay $540,000 to subsidize affordable housing at another location. The pair sued in December 2012, arguing that the fee violated their Constitutional rights because it violated the prohibition of using private property “for public use without just compensation,” the publication said. A state appeals court did not agree with the couple and their lawyers then appealed to The High Court. [TRD]

Utah real estate investor may be retried over alleged Ponzi scheme

Federal prosecutors intend to retry Utah investor Rick Koerber, accused of running a real estate Ponzi scheme. Jurors in his Oct. 16 eight-week trial were unable to reach a verdict, resulting in a mistrial, according to the Salt Lake Tribune. Prosecutors filed a motion this week requesting a scheduling hearing to set a new trial. The prosecution alleged that $100 million was entrusted to the defendant and over $50 million was redistributed to other investors. Despite the time and cost involved in retrying the case, U.S. Attorney for Utah John Huber said, “it is the right thing to do.” [SLT]

Maryland AG looking into housing complaints at Kushner Companies affiliate

An affiliate of Kushner Companies is being investigated about allegedly coercive debt collection practices and poor maintenance at housing developments in Maryland. Attorney General Brian Frosh of Maryland is looking into the situation at multifamily housing run by Westminster Management  in response to media reports, according to CNN. Both the New York Times and ProPublica described problems such as mold and vermin there, while The Baltimore Sun described aggressive practices such as arrests of tenants. CEO Jared Kushner stepped down to join the White House in January. [CNN]


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