Urbanexus Update - Issue #86
Urbanexus Update - Issue #86
H. Pike Oliver compiles this weekly update of real estate and community development news. Please note that some links may lead to items that are behind a paywall.
Economics and finance
One of the questions people always wonder about is why is it that real estate so heavily uses mortgages and even non-mortgage debt instruments. Real estate expert Peter Linneman explains.
Long-term capital market assumptions
The 2020 edition of J.P. Morgan's Long-Term Capital Market Assumptions was written against a backdrop of trade tension between the world’s economic superpowers and a reversal in the trajectory of global monetary policy. While these both have far-reaching and complex implications, they effectively boil down to two interconnected issues: the contour of future economic growth, which is influenced significantly by trade, and the rate at which we discount that growth in asset markets. These issues can amount to a trade-off; for instance, something that lowers forward growth might also serve to lower discount rates, muting the impact on asset prices today, and vice versa.
Office
WeWork exploring leases for possible exits
WeWork is reviewing about 100 leases around the globe and could pull out of some of them as it works to stem its losses, the company confirmed after a report in The Information. The leases comprise 10% to 15% of its global office leases. A WeWork spokesperson said the leases are being looked at as part of a broader review of the company's global operations.
Residential
On November 5, 2019, the Federal National Mortgage Association hosted InnovateHousing™ with the Washington Center for Real Estate Research. Seattle’s influx of tech companies resulted in a population explosion of high-income earning residents, and an increased demand for affordable housing. They broughttogether technology companies, innovators, and startups in home construction, home buying, and home financing to talk about how they’re applying transformational lessons from other industries to housing.
Increase in instant buyers — www.prnewswire.com
Instant buyers, or "iBuyers", purchased 3.1% of the homes sold during the third quarter of 2019 across 18 markets in the USA, up from 1.6% a year earlier according to an analysis from Redfin (www.redfin.com), the tech-powered real estate brokerage. The markets where iBuyers had the largest share were Raleigh (6.8%), Phoenix (5.1%), Atlanta (4.4%) and Charlotte (4.3%).
The term "iBuyer" (short for instant buyer) is used to describe real estate companies, such as RedfinNow, that use technology to make quick cash offers and purchase homes directly from homeowners. They then quickly update and resell the homes.
Perspective on rent control in Upstate New York
Controversy about New York State’s expansive new rent-regulation law has centered on New York City. It’s the city, after all, that has more than 1 million rent-regulated units, whose owners no longer expect rent increases even when physically upgrading apartments but who also face long delays in evicting disruptive, nonpaying tenants. The new law applies statewide, though, permitting municipalities to adopt rent regulation if they choose, and some cities in New York’s declining upstate are considering it. Per Howard Husock, a clear-eyed look at their housing markets should convince them otherwise.
Homebuilder resurgence in the USA Left for dead early in the year, homebuilders have sprung back to life this year - surging more than 50% - after falling into a mini housing recession in 2018.
Metropolitan and regional dynamics
Migration to metropolitan cores may have peaked
As economist Jed Kolko has observed, the “historic” shift back to the inner city appears to have peaked. In the United States since 2012, suburbs and exurbs have been growing faster with seven times as many people as the core. Suburbs are also seeing a strong net movement among educated people, those earning over $75,000 and, especially, those between the ages of 30 and 44. More revealing still, the county’s three largest cities—New York, Los Angeles, and Chicago—are now losing population again.
Construction
Taller wood buildings — www.thinkwood.com
With rising demand for new urban buildings, and increased interest in sustainable and efficient construction, the potential for tall wood buildings is expected to grow. Learn about different aspects of Tall Wood Building and design with this Continuing education unit.
Environment and resilience
Portland welcomes its first zero energy community
Tillamook Row in Portland, OR is a 16-unit community on a little more than a half-acre incorporates the following green features:
Solar panels are located on all south-facing roofs, totaling 82kW of energy produced annually.
Triple-paned windows block out external sound and limit the amount of hot and cold air that usually transfers through windows.
A super-insulated, airtight building envelope, including thick insulation in the walls, roofs, and underneath the slab on grade, reduces the heating and cooling loads by nearly 90%, according to the builder.
Energy-efficient heating and cooling systems also reduce the high energy demand. Plus, each unit continuously supplies filtered air to bedrooms and living spaces and extracts from bathrooms and kitchens through heat recovery ventilators.
Transcritical hot water heat pumps cut water energy use down by half. This type of heat pump uses CO2 as the refrigerant, which also reduces the global warming potential of the system.
Energy Star–rated appliances and LED light fixtures help reduce energy demand.
Protecting floodplains could cut flood costs
Buying flood-prone U.S. land and protecting it from development would be far cheaper than paying later for flood damage to homes and other structures built there, researchers said Monday. With floods one of the mostly costly disasters, and U.S. communities and farms facing record ones this year, protecting floodplains appears to be "hugely cost-effective", said Kris Johnson, North American deputy director of agriculture for the Nature Conservancy, a environmental nonprofit.
Environmental cost of obstacles to higher density housing
Local bans on attached homes in cities are driving up energy use and helping cook the climate, the United Nations Environment Program wrote in a report published in November 2019. “In some locations, spatial planning prevents the construction of multifamily residences and locks in suburban forms at high social and environmental costs,” the report’s authors wrote. They suggest a 20 percent cut to average floor area per person by 2050.