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.
Friday, the Dow Jones industrial average ended down 290.16 points, or 1.7%, to 16,384.58. The S&P 500 slumped 32.17 points, or 1.6%, to 1,958.03. The NASDAQ composite shed 66.72 points, or 1.4%, to 4,827.23.
U.S. oil dropped $2.22, or 4.7%, to $44.68 per barrel. Brent crude, the global benchmark, fell $1.61, or 3.3%, to $47.47 per barrel in London. Wholesale gasoline fell 2 cents to $1.356 per gallon. Heating oil slipped 3.9 cents to $1.491 per gallon. Natural gas fell 4.7 cents to $2.605 per 1,000 cubic feet.
What the Federal Reserve wants to see before raising rates — So what will it take for the Federal Reserve to finally raise interest rates? The U.S. economy is now in its seventh straight year of expansion. It’s growing at a steady if unexciting 2.2% annual rate. Unemployment has sunk from a 10% peak to a reassuring 5.1%. Auto and home sales have accelerated. Yet on Thursday, Fed officials declined to lift rates from record lows. The decision left some Fed watchers mystified over what the central bank needs to see to begin phasing out a policy it launched in 2008 to help save a collapsing economy. Many economists believe that it will take at least three things to make the Fed move: a stable dollar, steady oil prices and further improvement in the U.S. job market. (AZ Daily Sun)
Under the Hood of U.S. Housing Starts Is Tamer Rent Inflation “Here’s one key takeaway from the Commerce Department’s report Thursday in Washington that showed housing starts fell in August, indicating the real-estate recovery will take time to evolve. It also showed the number of buildings with five or more units under construction climbed to the highest level since December 1974.” (Bloomberg)
Some $3 Billion Worth of Construction Projects Started in the First Half of 2015 “Nearly $3 billion in construction projects were started during the first half of 2015 by New York City's public and private institutions—the best start to a year since 2009. The figure was up $796 million from the same period in 2014, a 269% increase, according to a New York Building Congress analysis of construction data from Dodge Data & Analytics.” (Crain’s New York Business)
Criticized by Trump, Carried Interest Tax Loophole is Vulnerable “Give Donald Trump credit for this: The Republican presidential candidate has done more to put a stake in the heart of the carried interest tax loophole in the last month than the Obama administration has in the last six and a half years. That’s not for want of trying by the White House. Yet it lives on, lining the pockets of billionaire financiers and hedge fund and private equity managers by giving them preferential tax treatment.” (The New York Times)
Years After the Real Estate Crash, Renters Are Still on the Rise “Nearly a decade after the housing crash, homeownership is still waning and renting is on the rise, according to U.S. Census data released Thursday. The homeownership rate fell to 63.1% in 2014, down from 63.5% in 2013, according to an analysis of the American Community Survey data prepared by Jed Kolko, a senior fellow at the Terner Center for Housing Innovation at the University of California, Berkeley.” (Builders online)
The Art of the REIT Deal “Investors should view REITs in a categorically different light than a private real estate investment. While acquisition behavior amongst small parcel, small-time investors and REITs may be similar, the way a REIT is priced on an ongoing basis will be largely incongruent from the way an individual property might be. This may confuse the average retail investor, since most equity REITs are merely containment tanks for a large group of properties.” (Seeking Alpha)
Madison Realty Capital Lends $124M Against East Village Real Estate Portfolio “New York-based real estate investment firm Madison Realty Capital provided a $124 million loan to Raphael Toledano’s Brookhill Properties for the acquisition of a 16-building portfolio in the East Village, Commercial Observer has learned. Brookhill closed on the $97 million acquisition earlier this month, from longtime owners, the Tabak family.” (Commercial Observer)
Alchemy, Clarion Pay $99M for 25-Story Midtown Office Building’s Leasehold “Alchemy Properties and ABR Partners, in partnership with Clarion Partners, acquired the leasehold of a 25-story Midtown East office building for $99 million, after Meadow Partners spent the past two years replacing many of the old tenants with new ones, The Real Deal has learned. Meadow Partners paid $61 million in 2013 for the leasehold at the 220,000-square-foot property.” (The Real Deal)
IRS Questions Real Estate Spinoffs “This week, the IRS released a notice indicating that it and the U.S. Treasury Department were “concerned” that corporations are using spinoffs of assets to avoid paying taxes on otherwise taxable transactions. So the IRS said it would stop ruling on any request while it studies the issue.” (Nation’s Restaurant News)
Grocery Outlet Sees Potential for 100-Plus SoCal Stores “Grocery Outlet Bargain Market said Thursday it sees the possibility of opening between 100 and 150 of its extreme-value stores in the Southern California marketplace over the next few years. The company, based in Emeryville in Northern California, plans to enter the Los Angeles market in December with two stores, expanding to 14 by the end of 2016 and another 14 or so by the end of 2017.” (Supermarket News)
Jobless rates fall in 29 states in August amid job gains — Unemployment rates fell in 29 states in August and held steady in 11 as hiring remained solid nationwide. Falling oil and coal prices continued to take a toll on energy-producing states. The Labor Department said Friday that rates rose in the remaining 10 states. Employers added jobs in 32 states and shed them in 18. Oil prices that are sharply lower than a year ago contributed to job losses and higher unemployment in several states, including Alaska, North Dakota, and Texas. And falling demand for coal has devastated West Virginia, which has the nation’s highest unemployment rate at 7.6%. That is up from 7.5% in July. (NY Times)
US household wealth reaches new high of $85.7 trillion — Rising home values drove a modest increase in Americans’ household wealth to a new high of $85.7 trillion in the April-June quarter. The Federal Reserve said Friday that Americans’ stock portfolios climbed $61 billion in value, while housing wealth increased $499 billion. Total household wealth is up from $85 trillion in the first quarter. Rising household wealth can help boost growth by making consumers feel wealthier and more likely to spend. Economists estimate that consumer spending rises 3 to 5 cents for every dollar increase in wealth. Household spending drives about two-thirds of the economy. (ABC)
Index of US economy shows small 0.1 per cent gain in August — An index of future U.S. economic health edged up slightly in August after a flat reading in July. The outcome in both months signaled economic growth could be moderating. The Conference Board said Friday that its index of leading indicators rose 0.1 per cent in August following no change in July and a 0.6% jump in June. The July reading had initially been reported as a decline of 0.2%. (Fox)
AP Source: UAW-Fiat Chrysler pact raises pay, profit-sharing — Hourly pay, profit sharing and performance bonuses will rise, but car production will move to lower-cost Mexico and be replaced by trucks and SUVs under a new contract between Fiat Chrysler and the United Auto Workers, a person briefed on the deal said. Union leaders will explain details of the four-year pact to factory-level leaders at a meeting Friday afternoon in Detroit. They’ll vote on it, and if approved, it will go to FCA’s 39,000 union workers for another ratification vote that’s likely to be finished next week. (ABC)
Moody’s downgrades credit rating of France — Moody’s Investors Service is downgrading the credit rating of France, saying the French economy will grow slowly for the rest of this decade while the country’s debt remains high. The firm lowered its rating to “Aa2″ from “Aa1.” That means France has Moody’s third-highest possible rating. Moody’s said Friday the outlook for economic growth in France is weak, and it does not expect that to change soon. It says the high national debt burden probably will not be reduced in the next few years because of low growth and institutional and political constraints. (Moody’s)
Novel plan to curb drug costs seeks candidates’ attention — Consumer-friendly ratings of the benefits of new drugs. Limits on what patients pay. Requiring drug companies to disclose how much they actually spend on research. With the public concerned about the high cost of new medications, these are some of the proposals offered Friday by a policy center often aligned with the Obama administration. The multistep plan from the Center for American Progress aims to get the attention of the 2016 Democratic presidential candidates. Hillary Rodham Clinton and Vermont Sen. Bernie Sanders are both on record advocating action against overpriced medications. (Washington Times)
US eases rules for travel, doing business in Cuba — The Obama administration eased rules Friday for U.S. citizens wishing to travel to Cuba or do business with its growing ranks of independent entrepreneurs, hoping to kindle greater economic freedom on the island. The Treasury and Commerce departments said the regulations that take effect Monday simplify procedures for tourism, telephone and Internet investments, and money transfers to Cuba. (NY Times)