National Real Estate Cheat Sheet: Home flipping loans hit 9-year high, rents drop in San Francisco … & more

Loans for home flipping hit nine-year high

Did anyone say bubble? Eight years ago, many bankers would have been worried about the prospect of home-flipping loans approaching the volume that they reached before the 2008 crash. And…that’s what’s happened. They’re currently at a nine-year high, according to Attom Data Solutions, a multi-sourced property database. And although the actual number of homes flipped were down from the previous quarter and the same time last year, 2017’s first quarter loans were up by almost a billion dollars from the previous year. “Home flippers financed an estimated $3.5 billion in purchases for homes flipped during the quarter, up from $3.3 billion in the previous quarter and up from $2.4 billion a year ago to the highest level since the fourth quarter of 2007 — a more than nine-year high,” Attom’s Daren Blomquist said. [housingwire.com]

A new survey shows Chinese businesses will continue investing in the U.S., despite concerns about Trump

You can add Chinese businesses to the growing number of demographics worried about the potential effect the Trump administration could have on their livelihoods. A new survey by the China General Chamber of Commerce U.S.A. showed that 63 percent of respondents — comprised of 213 Chinese U.S.-based firms — expect government oversight of mergers and acquisitions involving Chinese firms to increase under President Trump. Chinese investors have been amongst the most robust in the New York real estate in recent years and 83 percent of respondents said the election will have no impact on their U.S. investments. However, Chinese investment did decrease in the first half of 2017 but this is believed to be primarily due to a tightening of capital outflows from the Chinese government, rather policies implemented by the Trump administration. [The Real Deal]

The best markets to invest in rental properties

The best rental cities for investors are all in the chilly Midwest. According to RentRange, a provider of market data and analytics for the housing industry, the top three markets during the first quarter of 2017 were districts in Detroit, Cleveland and Milwaukee. “While many markets may have high yields, they may have quite different rent growth percentages and vacancy rates,” said Dennis Cisterna, RentRange Data Services chief revenue officer. “A strong market would generally have a combination of high yields, low vacancies and high rent growth.” [housingwire.com]

WeWork ensures rapid expansion by buying a construction tech company

The co-working Goliath WeWork has flexed its muscles and bought construction tech company FieldLens to ensure a streamlined expansion of their offices. FieldLens’ software app coordinates the many moving parts of a construction project — the developer, architect, construction manager, etc. — allowing real-time communication. Citing the “loss at every stage of the building process as real estate, design, construction, and operations are provided by a large number of disparate providers,” WeWork’s chief product officer, David Fano hopes the app will help the company manage its millions of square feet of construction in the next year. The value of the deal was not disclosed. [The Real Deal]

Denver’s luxury real estate market ain’t slowing down

Talk about being high all the time. May was a record breaker for Denver’s high-end real estate market, as 179 homes priced over $1 million sold and closed, which marks an increase of over 21 percent from the month prior and 38 percent year-over-year, according to Denver Metro Association of REALTORS. It’s not just the high-end that’s doing well. Of the available listings on the market, only 41 percent are priced below $500,000, according to Steve Danyliw, chairman of the DMAR Market Trends Committee and a Denver real estate agent. Lower than normal supply is thought to be one of the main drivers. [Forbes] 

Google plans to open its largest campus ever in San Jose

Even by the tech giant’s own standards, this is big. Google is in talks to open a massive 6 million square-foot campus in the downtown Diridon Station district of San Jose, California. The proposed offices would be almost double the size of Google’s existing campus at nearby Mountain View. The mixed-use project could breathe life into the Diridon district — currently a hodge-podge of vacant lots, industrial buildings, a few stores and small offices — with 20,000 new jobs. On June 20, the San Jose City Council will consider a proposal to create an exclusive relationship with Google, in order to allow the company to buy city-owned properties. [Mercury News]

Multifamily rent growth slips to a six-month low

Multifamily housing rents may be up but their rate of increase has slowed significantly. The 1.5 percent growth in May was the lowest year-over-year increase in rent growth since 2011, according to Yardi Matrix’s monthly survey of 121 markets. An increased supply along with a decrease in available financing is thought to be main reason for the drop. “Projects intended to be started are being delayed, primarily in larger gateway cities like Houston, Chicago and Los Angeles,” Yardi’s Doug Ressler said. However, overall the multifamily rental market remains a good bet for investors, especially considering that 70 million young people are expected to hit “prime renting age” by 2024. Investors can expect a solid seven-year growth in the market leading up to that, Yardi claims. [Bisnow]

In the age of Trump, hoteliers are hoping currency fluctuations can offset harsh rhetoric

Talk of travel bans against Muslim-majority countries and harsh rhetoric against Mexico and other nations has deterred many from visiting the U.S. Hoteliers, though, still feel that money talks the loudest when it comes to predicting how the tourism industry will fare. Dara Khosrowshahi, CEO of travel booking site Expedia said, “the dollar is getting weaker, that should be a tailwind for the demand coming in.” However, Jonathan Tisch, CEO of Loews Hotels, cautioned that the U.S. could be facing a “lost decade” of tourism, similar to post 9/11, should current government policies persist. [The Real Deal] 

Fannie Mae just made getting a mortgage a whole lot easier

Debt-to-income (DTI) requirements are the Achilles’ heel of many millennials hoping to jump on the property ladder. If they owe too much money relative to a fledgling pay check, a bank will stamp their mortgage application with a rejection. Now, though Fannie Mae, the country’s largest source of mortgage money, plans to ease the pain by raising its DTI ceiling from the current 45 percent to 50 percent, as of July 29. Fannie Mae based its decision on research showing that borrowers with DTIs in the 45 percent to 50 percent range actually have good credit and are not prone to default. The decision means that borrowers with higher DTI ratios no longer have to turn to federal housing administration loans, which saddle them with PMI (Private Mortgage Insurance) payments, long into the life of the loan when equity has accrued. [The Real Deal]

In Atlanta, the hotel industry is on fire

Hotel, motel, Holiday Inn. All segments of the Atlanta hotel industry are ablaze with profit. “There’s momentum behind Atlanta, and that’s only continuing to rise,” Hunter Hotel Advisors President Teague Hunter said. A recent CBRE hotel report predicts Atlanta hotel RevPAR, or revenue per available room, will increase by 4.4% during 2017, mainly due to a 4% average daily room rate gain. While lower-priced hotels will reap much of gain, the more exclusive chains such as Solis and InterContinental Hotel, which are constructing new hotels in the area, are also expected to prosper. According to recent Marcus & Millichap report, 2,500 new hotel rooms opened in Georgia last year, with 5,200 more rooms underway at the beginning of the year. [BisNow]

Rents continue to drop in San Francisco and San Jose

Have Northern California’s tech-town rents hit a tipping point? It appears that way. In May, rents in San Francisco decreased 3.3 percent compared to May 2016 and the average rent sits at $3,369, according to RentCafé’s recent Apartment Market Report. All over the Bay rents were down. Prime Silicon Valley real estate in Sunnyvale, Santa Clara and San Mateo all registered rental declines. An increased supply along with wary renters preferring to look in the outlying towns such as Stockton, Sacramento and Modesto, which all showed rental increases, are thought to be factors. [Bisnow]

“American Idea” is the name of the new Trump-affiliated budget hotel chain

The president’s name may not be on the new American Idea budget hotel chain, but the Trump family stands to gain when their first hotel opens in Mississippi. In a partnership with Chawla Hotels, a chain based in the state, the three star hotels will feature well-known Americana-themed items such as an old Coca Cola machine. Eric Danziger, the chief executive of the Trump Organization’s hotels division, told the New York Times that the decision to launch the new hotel chain was not related to politics. Chawla is also partnering with the Trump Organization on its other recently launched hotel brand, Scion.  [The Real Deal]

Major retailers agree that a change is needed … just don’t ask them what it is

A crystal ball is the best bet for predicting the future of retail in America. That was the message coming from an Urban Land Institute panel in New York on June 6. The panel of experts featuring Brian Pall of Hudson’s Bay Company, Brittany Bragg, COO of Crown Acquisitions, Mary Rottler of Seritage Growth Properties, and moderator David Zoba of the Global Retail Leasing Board discussed the worrying retail market in the U.S. As brick and mortar stores struggle in the shadow of Amazon, the panel agreed that restaurants alone are not the answer. Other than providing “something different, something special, something exciting in the store,” the panelists weren’t able to name a solution. “What we’re very good at,” said Bragg, “is not predicting what will happen next.” [The Real Deal]

Tom Barrack, a key Trump ally, accused of $190M tax fraud by Italian prosecutor

Billionaire investor Tom Barrack, chairman of L.A.-based REIT Colony NorthStar, who also led President Trump’s inaugural committee, has been accused of cooking the books by an Italian prosecutor, Bloomberg reported. When selling four hotels, a golf course, a marina and undeveloped land in Sardinia, Italy to Qatar Holding LLC in 2012, Barrack and the 32 other individuals and companies named in a lawsuit are alleged to have used a Luxembourg company to artificially load their Sardinian firm with debt. They allegedly did it to reduce taxes due from the $600 million dollar transaction. Barrack and Colony’s attorney Daniel Petrocelli of O’Melveny & Myers said the investment firm Colony used for the sale paid all taxes owed under Luxembourg and European Union law. [The Real Deal]

Senator Ted Cruz to speak at an EB-5 Visa conference co-sponsored by Related Companies

It could be a cocktail for controversy — real estate investing, U.S. visas and politics — as Nicole Kushner Meyer, sister of Jared, recently found when she to raise $150 million from Chinese investors for a Kushner Companies’ real estate project in Jersey City. However, that hasn’t stopped Sen. Ted Cruz from agreeing speak at an EB-5 investment industry gathering co-sponsored by Related Companies in late July, according to the event’s website. The EB-5 program provides green cards to foreigners who invest at least $500,000 in job-creating real estate projects in low-employment areas. However, it has come under criticism for funneling money to luxury developments through gerrymandering. Related’s top execs are prominent Republican donors. [The Real Deal]