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.
Tuesday, the Dow Jones industrial average fell 200.38 points, or 1.1 per cent, to 18,128.66. The Standard & Poor’s 500 index lost 26.93 points, or 1.2 per cent, to 2,136.73. The NASDAQ composite index slid 81.89 points, or 1.5 per cent, to 5,246.79.
Benchmark U.S. crude oil lost 56 cents, or 1.1 per cent, to close at $50.79 a barrel in New York. Brent, the international standard, slid 73 cents, or 1.4 per cent, to close at $52.41 a barrel in London. In other energy trading, wholesale gasoline fell a penny to $1.48 a gallon. Heating oil slipped 2 cents to $1.59 a gallon. Natural gas shed 4 cents to $3.24 per 1,000 cubic feet.
Court of Appeals Rules CFPB is ‘Unconstitutionally Structured.’ But Agency’s ‘Ongoing Operations’ Will Not be Affected -- What was once unthinkable actually happened, as the United States Court of Appeals for the District of Columbia Circuit handed an earth-shattering victory to PHH, declaring the Consumer Financial Protection Bureau’s leadership structure unconstitutional and vacating a $103 million fine against PHH. PHH, a mortgage lender, made national headlines when it challenged CFPB Director Richard Cordray’s $103 million increase to a $6 million fine initially levied against PHH for allegedly illegally referring consumers to mortgage insurers in exchange for kickbacks. The case was one of the first occasions that a company fought back against the CFPB, the governmental agency that formed after the financial crisis and was a celebrated achievement of the Dodd-Frank Act, at least by those on the left. In this case, the issue began in June 2015, when Cordray exercised his authority to layer an additional $103 million fine on top of the original $6.4 million penalty from Administrative Law Judge Cameron Elliot. The fine centered around Cordray saying that PHH violated the Real Estate Settlement Procedures Act (RESPA) every time it accepted a kickback payment on or before July 21, 2008 – going far beyond Elliot’s ruling, which had limited PHH’s violations to kickbacks that were connected with loans that closed on or after July 21, 2008. (Housing Wire)
GSE Purchase-Mortgage Business Hits Post-Crash High in 3Q16, While Refi Sector Keeps Percolating -- Fannie Mae and Freddie Mac securitized $135.69 billion of single-family purchase mortgages during the third quarter, according to a new Inside Mortgage Finance analysis of mortgage-backed securities disclosures by the two government-sponsored enterprises. That was up a hefty 26.2 percent from the previous quarter, and it represented the biggest quarterly flow of purchase mortgages to the GSEs since the housing market collapse. Although the loans were pooled in MBS issued during the third quarter, a significant number of them were actually originated during the April-June cycle. (Inside Mortgage Finance)
These Government-Approved, High-Interest Green Loans Are Turning Mortgage Lending Upside Down “When Lucia Chavez saw her mortgage bill, she thought there had to be a mistake. For years, the 70-year-old Vista, California homeowner had paid about $990 every month. But in early 2015, after solar panels were installed on her roof, Chavez, a retiree, discovered a total of $1,500, a sum she couldn’t afford, had been paid from her bank account. Chavez said the company that pitched her on the panels, Fidelity Home Energy, did not explain how expensive they would be.” (MarketWatch)
Amazon’s Next Push Into Bricks-and-Mortar Shops Appears to Target Convenience Stores “Amazon isn't going to sit idly by as Wal-Mart zeroes in on the online grocery business. Instead, as the world's largest retailer pushes forward in the category — which makes up roughly half of its sales — Amazon is reportedly eyeing a bigger piece of the action. People familiar with the strategy told the newspaper that shoppers could use their smartphones or screens scattered around the shops to place their orders.” (CNBC)
Lower Manhattan Landlords Missing Out on $175 Million in Retail Opportunities “Lower Manhattan is full of young New Yorkers looking to part with substantial amounts of disposable income, a report released Monday by the Downtown Alliance concludes, findings the development-advocacy group hopes will spur neighborhood landlords to allocate more space for restaurants, bars and entertainment. Sixty percent of apartments in the Financial District, Battery Park City and South Street Seaport are occupied by single tenants, nonrelated roommates or unmarried couples who don’t have to spend cash on child care. That’s one of the highest rates in the city.” (Crain’s New York Business)
Costco Enters Retail’s “War on Amazon” “Like most, Costco offers customers bricks-and-mortar as well as online shopping experiences. Similarly, like most, Costco strives to set itself apart from the competition. From a shopper’s point of view, I think Costco does a pretty good job presenting a self-contained shopping extravaganza, but more importantly, I’m not alone. Costco’s loyal customers and foot traffic are proof that free samples and cases of two dozen paper goods are still en vogue with consumers.” (Forbes)
Mega-Property Sale Includes 9 Buffalo-Area Shopping Plazas “DLC Management Corp. has added to its vast real estate holdings by acquring 16 shopping centers from DDR Corp. All but one of the plazas is located in New York state — 9 are in the Buffalo area, one is in Olean, five more in Upstate New York. The other property is in Birmingham, Alabama. Working in a joint venture with fellow real estate investment group, DRA Advisors LLC, DLC’s deal adds 4.85 million square feet to its portfolio — 26 percent increase for the Tarrytown-based company. DLC Management now has 21.7 million square feet in its holdings.” (Buffalo Business First)
Airbnb’s Plan to Woo Landlords Isn’t Going Very Well “Airbnb’s attempt to bring landlords into the fold by offering them a cut of revenue is off to a rocky start. In an effort to get landlords to allow their tenants to rent units on Airbnb, the rental giant launched a program last month which offers landlords a cut of revenue between 5 and 15 percent from Airbnb guests in their buildings. But a month in, the returns aren’t promising. Landlords are concerned about getting entangled in legal and regulatory issues, as well as dealing with the risk of unknown guests.” (The Real Deal)
Sears, Macy’s and J.C. Penney Are Fueling a $48 Billion Crisis in the Retail Industry “There's no end in sight to American's shopping mall crisis, according to a Morningstar research report. Hundreds of shopping malls have shut down over the last several years amid a pullback in consumer spending on apparel and accessories and the growth of ecommerce. But the US is still oversaturated with shopping malls, and that's putting $48 billion in loans backed by mall properties at risk, according to the Morningstar analysts.” (Business Insider)
Suburban Mixed-Use Office Markets in U.S. Outperform Downtown Peers “According to CBRE Group, Inc., vacant space in the U.S. office market held steady during the third quarter of 2016 at 13.1 percent. The national office vacancy rate remained at the lowest level since 2008, with a 30 basis points (bps) decline over the past year. The office market is being helped by steady demand for space and limited new construction. ‘Firms are adding space, but at a more modest pace than in recent years, reflecting slower overall job creation,’ said Jeffrey Havsy, Americas' chief economist for CBRE.” (World Property Journal)
That Swanky New Rental Apartment Could Finally Be Yours “For the last four years the skies of major U.S. metropolitan housing markets have been littered with cranes. As the homeownership rate fell following the recession, the towers rose — the vast majority boasting luxury rentals, complimented by high-end amenities like rooftop dog parks, fitness centers, private movie theaters and party rooms. Now all that construction has largely come on line, and sky-high rent growth is officially shrinking.” (CNBC)
NorthStar Completes $370M in Portfolio Transactions “NorthStar Real Estate Income II Inc. has invested $370 million in two significant portfolio transactions—a portfolio of 39 industrial real estate properties and a portfolio of 41 institutional-quality private equity real estate funds. Through subsidiaries of its operating partnership, NorthStar Income II originated an approximately $98 million subordinate interest investment in a portfolio of 39 industrial real estate properties, which are currently 100 percent leased with an average remaining lease term of nearly 11 years.” (Commercial Property Executive)
Comcast fined $2.3M to end probe into mischarging customers — Government regulators are fining Comcast $2.3 million, saying the cable giant has charged customers for stuff they never ordered, like premium channels or extra cable boxes. The Federal Communications Commission said the Philadelphia company must clearly ask customers before charging them for new services or equipment and make it easier for customers to fight charges they think are wrong. Comcast said Tuesday that it’s been working to improve customer service and that the problems uncovered by the FCC stemmed from “isolated errors or customer confusion” rather than intentionally mischarging its 22 million cable-TV subscribers. (NewYork AP)
Electronics retailer hhgregg to close for Thanksgiving — Consumer electronics chain hhgregg Inc. has become the latest retailer to take a stand against Thanksgiving shopping and plans to close its doors for the holiday. The Indianapolis-based chain with 220 stores in 19 states says it’s important for its associates to be home with their families on Thanksgiving. But the retailer also says it makes good business sense too as it’s not getting a huge spike for that day. It noted that its online site will continue to offer lots of deals on Thanksgiving. It will re-open at 7 a.m. on the Friday after the turkey feast. (New York AP)