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Real Estate Daily News Buzz December 9, 2016

Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz of the day will be.

Thursday, the Dow Jones industrial average gained 65.19 points, or 0.3 percent, to 19,614.81. The Standard & Poor’s 500 index added 4.84 points, or 0.2 percent, to 2,246.19. The Nasdaq composite jumped 23.59 points, or 0.4 percent, to 5,417.36.

Benchmark U.S. crude rose $1.07, or 2.1 percent, to $50.84 per barrel in New York. Brent crude, the international standard, added 89 cents, or 1.7 percent, to $53.89 a barrel in London. In other energy trading, wholesale gasoline was little changed at $1.50 a gallon. Heating oil gained 1 cent to $1.63 a gallon. Natural gas jumped 9 cents, or 2.6 percent, to $3.70 per 1,000 cubic feet.

US 30-year average mortgage rate rises to 4.13 percent – Long-term U.S. mortgage rates climbed for the sixth straight week in the aftermath of Donald Trump’s election win, marking new highs for the year. Mortgage giant Freddie Mac said Thursday the average rate on a 30-year fixed rate loan jumped this week to 4.13 percent from 4.08 percent the previous week. The benchmark rate surpassed its 3.95 percent level of a year ago. The rate on 15-year home loans, a popular choice for people who are refinancing, rose to 3.36 percent from 3.34 percent. Long-term mortgage and interest rates have surged in the five weeks since Trump’s surprise victory in November to become the country’s next president.

US home price gains lift household wealth to $90.2 trillion – A healthy increase in home values and higher stock prices drove up U.S. household wealth in the July-September quarter, though the gains are largely concentrated among wealthier Americans. The Federal Reserve said Thursday that real estate values increased $554 billion in the third quarter, while Americans’ stock and mutual fund portfolios rose $494 billion. Total household wealth, which includes checking and savings accounts and subtracts mortgages and other debt, increased 1.8 percent to $90.2 trillion. The rise suggests that Americans’ finances are improving, with more families building equity in their homes.

Claims for US unemployment aid slide again – Fewer Americans signed up for unemployment benefits last week, another sign the U.S. job market remains healthy. The Labor Department said Thursday that weekly claims for jobless aid slid by 10,000 to a seasonally adjusted 258,000. The less-volatile four-week average rose by 1,000 to 252,500. Overall, 2.01 million Americans are collecting unemployment checks, down 10 percent from a year ago. Claims have come in below 300,000 for 92 straight weeks, longest such streak since 1970. The applications are a proxy for layoffs, and the low numbers suggest that employers are hanging onto their workers and that most Americans enjoy job security.

Russians Flock to U.S. Real Estate after Trump Victory “The number of Russians who have expressed interest in buying luxury properties in the U.S. has spiked by 35% over the previous year following the billionaire’s win, according to global real estate consultancy Knight Frank. Knight Frank said Russians are interested in vacation homes as well as investment properties. Nearly all are looking to spend between $500,000 and $5 million on a residential property, while 10% are hoping to buy commercial real estate.” (CNN Money)

Amazon: No, We’re Not Opening 2,000 Stores “Can’t wait to shop at an Amazon supermarket? Well, you may have to wait a very, very long time. Two days after The Wall Street Journal reported that Amazon plans to open “more than 2,000 brick-and-mortar grocery stores under its name,” the company knocked down the idea as false. ‘It’s absolutely not correct,’ Amazon spokeswoman Pia Arthur said in an emailed statement Wednesday. ‘We have no plans to open 2,000 of anything. Not even close. We are still learning.’ The online retailer also batted down the claim by the publication that Amazon envisions opening a 30,000- to 40,000-square-foot store that would resemble a discount grocery chain like Aldi.” (CNET)

Sears Says It’s Likely to Close Many More Stores as Sales Slide Worsens “Sears finance chief, Jason Hollar, said the company had a lot of flexibility to keep closing more stores given that about 550 of its stores have leases that expire in just a few years. Sears ‘will continue to close unprofitable stores as their leases come due,’ he said, adding that the company would ‘end up with a smaller but meaningfully-sized store base.’ Sears’ promises to investors have stretched investor credulity. Indeed, shares have fallen by about 40% this year.” (Fortune)

Mortgage Rates Soar to Fresh 2016 High, Freddie Mac Says “The 30-year fixed-rate mortgage averaged 4.13% in the Dec. 8 week, up five basis points during the week. The 15-year fixed-rate mortgage averaged 3.36%, up from 3.34% in the prior week. Both are at 2016 highs. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.17%, up two basis points. Mortgage rates loosely track the benchmark 10-Year Treasury yield, but move more slowly and within a narrower range.” (MarketWatch)

Houston’s Real Estate Sector Isn’t in Too Much Trouble—Yet “Office vacancy rates now stand at 17.1 percent, according to the most recent report from Colliers. Marcus & Millichap expects apartment vacancies to rise to 7 percent by the end of the year, up from 5.8 percent in the third quarter. Hotel revenues per available rooms have been declining, as new facilities come online, with fewer business travelers to fill them. But here’s the bright side: All that new inventory hasn’t been performing so badly that developers can’t afford to pay back the money they used to build it.” (Houston Chronicle)

House Flippers Flee ‘Flashy’ Cities as Prices Rise and Inventories Fall “Home flipping dipped in the third quarter as the chronically low inventory and higher prices plaguing the housing market made it more challenging to buy real estate cheaply enough to turn a nice profit. There were 45,718 single family homes and condos flipped during the quarter, according to Attom Data, down 7% compared with a year ago. In the second quarter, flipping — defined as a property that is sold in an arms-length sale for the second time within a 12-month period — had touched a nine-year high.” (MarketWatch)

Vornado Secures $400M Loan for 350 Park Avenue “Vornado Realty Trust has secured $400 million in financing for 350 Park Avenue in Midtown Manhattan. The ten-year loan has a fixed rate of 3.92 percent. According to Vornado, the deal generated net proceeds of $111 million after it paid back the property’s existing $284 million mortgage and closing costs. A report from Commercial Mortgage Alert identified Goldman Sachs as the lender in the deal. The building, known as the ‘wedding cake tower’ because of its tiered design, is located between 51st and 52nd Streets.” (Real Estate Weekly)

RLJ Lodging Trust Trims Stake in NYC Hotels “RLJ Lodging Trust, of Bethesda, Md., has sold two hotels in New York City for $286 million or $494,500 per key, the REIT recently announced. The two properties are the 298-room Hilton Garden Inn New York/West 35th Street and the 280-room Hilton New York Fashion District in Manhattan. The price reportedly represents a cap rate of about 4.7 percent on the hotels’ projected 2016 net operating income, including planned capital expenditures. The sale cut the share of RLJ’s pro forma 2016 hotel EBITDA from the New York City market to less than 5 percent.” (Commercial Property Executive)

Target Sponsors Home Décor Pop-Up in Manhattan “Target Corp. has teamed up with Domino, a trendy home decor magazine. The store, called Domino Holiday Dream, features products curated by Domino’s editorial staff and inspired by the magazine’s winter issue, the report said. Target has provided a gift-wrapping station at the store, with wrapping options that are also available at Target stores and on its online store.” (Chain Store Age)

 

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