News: Real Estate, Risk, Economics. May 22, 2015

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Table of Contents
(Click to sections below.)

1) Washington City to Get Tsunami Warning System

2) Louisiana Tornado Injures 3, Damages 3 Homes

3) The benefits of Brentry | The Economist

4) 'Critical Alert': Jeff Sessions Warns America Against Potentially Disastrous Obama Trade Deal [from May 3, 2015]

5) Environmental TPP Chapter Leaked: Weaker Than Previous Agreements | PopularResistanceOrg [from January 15th, 2014]

6) Oil price plunge leads to project cuts – YouTube

7) Sen. Elizabeth Warren: Trade Deals Should Not Let Corporations Challenge Laws Outside of US Courts – YouTube

8) Is this the last of the bank fines? – YouTube

9) 41,000 Foreclosures in March – YouTube

10) Robert Reich (The Revolt of Small Business Republicans)

11) The Dysfunctionality of Slavery and Neoliberalism | unsettling economics

12) A Finance Minister Fit for a Greek Tragedy? – NYTimescom

13) Die Zeit's Q&A on Dr Wolfgang Schäuble | Yanis Varoufakis

14) Los Angeles Lifts Its Minimum Wage to $15 Per Hour – NYTimescom

15) Good News for Multifamily Rent Growth | Multifamily content from National Real Estate Investor

16) Minimum Wage in US Cities Not Enough to Afford Rent, Report Says – Developments – WSJ

17) World Employment Social Outlook 2015: Global wage gap puts the brakes on the global economy

18) RealtyHop Helps Investors Find Underappreciated Rental Properties | TechCrunch

19) Landlords of Miami residents living in 'slums' deny owning properties | News – Home

20) East Central residents fed up with nuisance properties | Spokane – KXLYcom

21) Auctioncom to Market US Real Estate to Chinese Buyers – Bloomberg Business

22) REAL ESTATE: Banks step up Inland home repossessions – Press Enterprise

23) Why Vancouver house prices could trigger a labour shortage | CTV News

24) Barry Ritholtz: Be skeptical about reporting on minimum wage | Dallas Morning News

25) The economic damage from the Nepal earthquake is almost half of the country's GDP – Quartz

26) [357] China's malinvestments and the forex rigging settlement – YouTube

27) How Should a Real Estate Investor Go About Building Their Team? [#AskBP 025] – YouTube

28) How to Stain Wood – YouTube

29) 1776: The Revolt Against Austerity by Steve Pincus | NYRblog | The New York Review of Books

30) LA's New Minimum Wage Isn't Worth Anywhere Close To $15 | FiveThirtyEight

31) Grand Central: Is the Fed's 2% Inflation Target Too Low? – Real Time Economics – WSJ

32) Once-Unthinkable Criminal Pleas by US Banks Get Investor 'Meh' – Bloomberg Business

33) Rents Rising Faster Than Home Values | Zillow Blog

34) 7 major housing markets now 'overvalued'

35) A house that thumbs its nose at the drought

36) New Luxury Rental Projects Add to Rent Squeeze – WSJ

  1.    Washington City to Get Tsunami Warning System

    Birch Bay, Wash. will soon be equipped with a tsunami warning system.

    The Bellingham Herald reported that the Whatcom County Sheriff's Office is working with the state to set up an emergency warning system for Birch Bay that would provide advance notice of tsunamis and other natural disasters.

    Add your comment.


  2.    Louisiana Tornado Injures 3, Damages 3 Homes

    A 110-mph tornado in Tickfaw, La. injured three people, damaged eight houses and uprooted hardwood trees, authorities said.

    The twister hit about 3:30 a.m. Sunday in Tickfaw, which is about 50 miles northwest of New Orleans, according to the National Weather Service.

    Add your comment.


  3.    The benefits of Brentry | The Economist

    "Brentry" means British entry into the EU.

    …nailing down the effect of EU membership is maddeningly hard because of the absence of a counterfactual: an alternate Europe in which the EU never formed. The first decades of European integration coincided with a "Golden Age" of European growth. But much of that growth would probably have occurred with or without a move towards ever closer union, thanks to recovery from depression and war. Without the baseline for comparison provided by a counterfactual, frustrated economists must hazard guesses as to what caused what.

    Add your comment.


  4.    'Critical Alert': Jeff Sessions Warns America Against Potentially Disastrous Obama Trade Deal [from May 3, 2015]

    Conservatives and liberals have strong reasons to doubt the trade deals being proposed by the Obama administration. Here's a reason given by conservatives:

    Sen. Jeff Sessions (R-AL) is sounding the alarm to his colleagues Senate-wide, warning them and the American public with a "critical alert" published Sunday evening that voting for the Trade Promotion Authority (TPA) deal that would set up the Trans-Pacific Partnership (TPP) trade deal with Asian countries is fraught with problems and concerns.

    The third major point of Sessions' "critical alert" document lays out how passing TPA, and then TPP, means the United States is effectively "ceding sovereign authority to international powers." Sessions cites the U.S. Trade Representative (USTR) and the Congressional Budget Office (CBO) to make his case, laying out how the so-called "living agreement" inside the TPP deal means that the deal could be changed by other countries and the president without congressional approval whatsoever.

    "A USTR outline of the Trans- Pacific Partnership (which TPA would expedite) notes in the 'Key Features' summary that the TPP is a 'living agreement,'" Sessions wrote. "This means the President could update the agreement 'as appropriate to address trade issues that emerge in the future as well as new issues that arise with the expansion of the agreement to include new countries.'

    "The 'living agreement' provision means that participating nations could both add countries to the TPP without Congress' approval (like China), and could also change any of the terms of the agreement, including in controversial areas such as the entry of foreign workers and foreign employees. Again: these changes would not be subject to congressional approval.

    "This has far-reaching implications: the Congressional Research Service reports that if the U nited States signs on to an international trade agreement, the implementing legislation of that trade agreement (as a law passed later in time) would supersede conflicting federal, state, and local laws. When this occurs, U.S. workers may be subject to a sudden change in tariffs, regulations, or dispute resolution proceedings in international tribunals outside the U.S.

    "Promoters of TPA should explain why the American people ought to trust the Administration and its foreign partners to revise or rewrite international agreements, or add new members to those agreements, without congressional approval. Does this not represent an abdication of congressional authority?"

    Add your comment.


  5.    Environmental TPP Chapter Leaked: Weaker Than Previous Agreements | PopularResistance.Org [from January 15th, 2014]

    Again, both conservatives and liberals have strong reasons to doubt the trade deals being proposed by the Obama administration. Here's a reason given by liberals:

    The Trans-Pacific Partnership will be a step backward on the environment and global trade, according to a leaked chapter of the TPP on the environment by Wikileaks. At a time of worldwide environmental challenges including species die-offs, dangerous pollution in the oceans and other waterways as well as climate change, people would expect that trade could be a tool to protect the planet not hasten ecological collapse, but the profits first mentality of the TPP will do the opposite.

    In the end, what does the environment get from the TPP? "Environmental protections are only as effective as their enforcement provisions, and a trade agreement with weak enforcement language will do little or nothing to protect our communities and wildlife," said Peter Lehner, executive director of the NRDC.

    Add your comment.


  6.    Oil price plunge leads to project cuts – YouTube

    This has such a huge impact upon the global economy that we all know it ties directly into real-estate values of all kinds. It also directly impacts risk management regarding the consequences of climate change.

    Oil prices have plunged since last summer, leading energy companies to slow, postpone or cut about $100bn of spending on new projects. The FT's Christopher Adams and Guy Chazan discuss the projects being axed and the wider implications for the oil market.

    Add your comment.


  7.    Sen. Elizabeth Warren: Trade Deals Should Not Let Corporations Challenge Laws Outside of U.S. Courts – YouTube

    Listen to Senator Warren also mention both conservative and liberal opposition to the trade legislation as proposed and what a number of Senators think should be done.

    Senator Elizabeth Warren delivered a floor speech on May 19, 2015 about an amendment she introduced with Senator Heidi Heitkamp (D-N.D.) and 13 other senators to the Trade Promotion Authority ("Fast Track") legislation that would prohibit Fast Track from being used to pass trade deals that include Investor State Dispute Settlement. More information about the amendment is available at: http://1.usa.gov/1edSXiB. ["…amendment that would prevent "Fast Track" authority from being used to pass trade deals that include Investor-State Dispute Settlement (ISDS)."]

    We stand adamantly opposed to the Investor-State Dispute Settlement (ISDS) system. It's a very bad, undemocratic system and ought to be globally repealed.

    Add your comment.


  8.    Is this the last of the bank fines? – YouTube

    Six banks have been fined $5.6bn over rigging foreign exchange markets, but their shares have climbed. Lex's Robert Armstrong and Oliver Ralph question the opacity of the punishment and ask whether there is more to come.

    We don't think it is simply a matter of whether there is more to come but rather whether cheating ultimately puts more on the bottom line than paying fines takes away. When banks caught cheating lose their licenses and are forced to close or better yet, are taken over by governments, then we'll be impressed.

    Add your comment.


  9.    41,000 Foreclosures in March – YouTube

    CoreLogic's March Foreclosure Report shows completed foreclosures were up slightly from February, but year-over-year they're down by 15 percent.

    Add your comment.


  10.    Robert Reich (The Revolt of Small Business Republicans)

    What do you think about this in terms of your real-estate investing?

    Small businesses won't benefit from such a tax deal because most are S corporations and partnerships, known as "pass-throughs" since business income flows through to them and appears on their owners' individual tax returns.

    So a corporate tax cut without a corresponding cut in individual tax rates would put small businesses at a competitive disadvantage.

    Add your comment.


  11.    The Dysfunctionality of Slavery and Neoliberalism | unsettling economics

    Despite the neoliberal obsession with wage suppression, history suggests that such a policy is self-destructive. Periods of high wages are associated with rapid technological change.

    It would be interesting to see how causative it is. It makes sense to us because higher wages keeping out in front of price increases allows more demand spending, which drives more competition, which drives more innovation.

    Some younger people might not find as many openings (at first), but their bread-winning parents would better afford to keep their offspring in good schools.

    An easy way to pay for higher minimum wages in a mixed economy driven by usury is via proportionally lowering the compensation paid at the very top, which would simply increase the entire pie and the amount of pie for those at the top anyway.

    Add your comment.


  12.    A Finance Minister Fit for a Greek Tragedy? – NYTimes.com

    "Stiglitz says that he tells his students that if their economic models and forecasts were that bad, he would give them an F."

    …the symbolic and moral failure of a union and monetary zone designed to prevent ethnic conflict and ensure prosperity for all European citizens would be incalculable. …

    …his European counterparts were exasperated. They were frightened, too, by the prospect of Varoufakis serving as inspiration for leftist movements elsewhere — especially in Spain, where Podemos, a leftist party led by activists who also oppose austerity policies, has made significant inroads. …

    The American economist Joseph Stiglitz, a Nobel Prize winner, describes Varoufakis's situation as "absolutely impossible." "There is an obsession among policy-making economists in Germany about fiscal balance," he says, "compared to unemployment, inequality, economic growth, financial stability." When Greece received its first bailout in 2010, the Europeans insisted on severe austerity while predicting that Greece's gross domestic product would shrink by only 4 percent. Over five years it shrank 25 percent. (Stiglitz says that he tells his students that if their economic models and forecasts were that bad, he would give them an F.) By 2011, according to Stiglitz, the European leaders admitted they needed a new strategy. "They never delivered," Stiglitz told me. "In a way, Europe has reneged on their promises over and over again, and Yanis and this new government have to pick up the pieces."

    Nonetheless, he [Varoufakis] said, he and the prime minister decided that they should reshuffle the teams to adjust to the current climate and the narrative that dominated the media, even though he denies that he was "sidelined." He represented Greece as usual at the next round of negotiations. "This is a narrative that feeds on itse lf," he said. "It's completely disconnected from reality, but it's a parallel reality, a Goebbels-like propaganda style that has a wonderful capacity to change the atmosphere."

    He described himself as simply the "lightning rod." He knew how difficult the job would be. "I take it all in stride. I would have been down in the dumps and upset, maybe even panicking, but I was expecting it. So it's O.K." Strangers on the streets of Athens, he says, still call out messages of support. "What they are starved of is a government that they can be proud of," he said. "We are not particularly concerned about retaining our positions. So that destabilizes the other side. They are used to politicians who are really keen to maintain their positions. And we're not that keen. We don't care. We want to do the right thing, and if we can't do the right thing, we'll go."

    The Germans, sticking to a failed ideology, are leaving Greece with no option but to leave the EU.

    Add your comment.


  13.    Die Zeit's Q&A on Dr Wolfgang Schäuble | Yanis Varoufakis

    Yanis Varoufakis answers an interview question:

    Do you think Mr Schäuble makes mistakes in his analysis of the Greek situation? If yes, which ones?

    Yes I do (as I am sure he thinks that I err in my analysis). Primarily, he associates past Greek governments with the Greek people; as if the former reflect the character of the latter. And he does not appreciate how helpful it would be for mainstream Northern Europe to find a modus vivendi with a movement (like SYRIZA in Greece) which may be very critical of European institutions but which is profoundly pro-European and eager to help bring Europe closer together.

    Add your comment.


  14.    Los Angeles Lifts Its Minimum Wage to $15 Per Hour – NYTimes.com

    LOS ANGELES — The nation's second-largest city voted Tuesday to increase its minimum wage from $9 an hour to $15 an hour by 2020, in what is perhaps the most significant victory so far for labor groups and their allies who are engaged in a national push to raise the minimum wage.

    "I would prefer that the cost of this was really burdened by those at the highest income levels," said Gil Cedillo, a councilman who represents some of the poorest sections of the city and worries that some small businesses will shut down. "Instead, it's going to be coming from people who are just a rung or two up the ladder here. It's a risk that rhetoric can't resolve."

    We shall see how it turns out.

    What we can be sure of is that those at the top will do everything they think they can get away with to make the higher minimum look as bad as possible.

    Add your comment.


  15.    Good News for Multifamily Rent Growth | Multifamily content from National Real Estate Investor

    Very strong demand would help absorb the flood of new apartments opening this year. Experts agree that demand to apartments will be fairly high, but there is some disagreement about whether it will be enough to absorb the more than 240,000 institutional-quality apartments scheduled to open in 2015, according to data firm Reis Inc. Reis expects the vacancy rate to rise 70 to 80 basis points this year to close to 5 percent on average—rising higher in a few, more overbuilt markets.

    "The most die-hard multifamily optimists will have their beliefs tested in the next six months," Victor Canalog, chief economist and senior vice president for Reis, noted earlier this spring.

    Many analysts always speak of higher rents as a good thing for landlords, but are they?

    Add your comment.


  16.    Minimum Wage in U.S. Cities Not Enough to Afford Rent, Report Says – Developments – WSJ

    Rental affordability has grown as a challenge in recent years due to a number of factors, including increasing demand as more people choose to rent or are forced to because they can't get mortgages; a relative lack of rental construction in recent years in comparison to past cycles; and stagnant wage growth.

    There is no state in the country where someone earning either the state or federal minimum wage can afford a market-rate one-bedroom apartment, according to the report. A minimum wage worker would need to work 86 hours per week to afford a one-bedroom apartment.

    Is that good for landlords?

    Add your comment.


  17.    World Employment Social Outlook 2015: Global wage gap puts the brakes on the global economy

    …especially in the advanced economies that are struggling with slow growth and high unemployment rates, pro-employment policies must also be viewed as pro-growth policies. So to break the vicious circle of weak economic growth and weak labour markets, policies should focus on spurring a recovery in employment.

    Would that be good or bad for landlords?

    Add your comment.


  18.    RealtyHop Helps Investors Find Underappreciated Rental Properties | TechCrunch

    Lin stresses that investors obviously still have to do their own due diligence. "We don't make any assumptions about vacancy rates, maintenance, and closing costs, because these can vary greatly depending on the buyer and unit," he said.

    Add your comment.


  19.    Landlords of Miami residents living in 'slums' deny owning properties | News – Home

    How to ruin your investments while putting many people in harms way:

    MIAMI – Local 10 News investigative reporter Christina Vazquez first reported Monday on the Miami residents of Liberty City and Overtown living in conditions described as substandard.

    "Mold and mildew, that's how they got us living," resident Gaynisha Williams said.

    Their voices illuminate what piles of paperwork document.

    Add your comment.


  20.    East Central residents fed up with nuisance properties | Spokane – KXLY.com

    SPOKANE, Wash. – Neighbors in the east central area of Spokane have been left feeling helpless and frustrated by nearby nuisance properties.

    To help assist in the eviction of abatements, neighbors can first call Crime Check at 456-2233 every time they have an issue. These reports play a big part in getting the tenants out.

    Add your comment.


  21.    Auction.com to Market U.S. Real Estate to Chinese Buyers – Bloomberg Business

    Chinese investors will have a new way to buy U.S. commercial real estate without leaving home.

    International property website Juwai.com formed a venture that will open Auction.com LLC's real estate sales to Chinese-speaking users in mainland China and elsewhere.

    Our view is that if they are rushed to invest, they won't worry enough about due diligence. That will drive up prices above what the fundamentals say they are really worth. When the bubble deflates enough in China, that will pull the bottom out from under some Chinese investments in the US.

    Add your comment.


  22.    REAL ESTATE: Banks step up Inland home repossessions – Press Enterprise

    Foreclosure filings hit an 18-month high in April across the nation, rising 8.6 percent year-over-year as lenders stepped up activity to clear their books of homes and condos caught up in the housing crisis.

    Add your comment.


  23.    Why Vancouver house prices could trigger a labour shortage | CTV News

    Sounding the alarm on Vancouver's real estate market, a new report warns that, by 2025, only individuals working in senior business, construction and engineering positions will be able to afford a house there.

    The report suggests the government take steps to address the problem, including amending zoning bylaws so developers are required to make a certain amount of below-market housing units, providing rental housing tax incentives, and repurposing public and community-owned land to create affordable residential units.

    It also calls on businesses to adjust wages to meet the cost of living.

    Add your comment.


  24.    Barry Ritholtz: Be skeptical about reporting on minimum wage | Dallas Morning News

    What we know about the minimum wage is that modest increases have a negligible effect on employment and usually work as a net economic positive to the region that passes them. The groundbreaking research by economists David Card and Alan Krueger has been confirmed by a lot of subsequent research.

    So why all the hand-wringing by the business community?

    Right now, the wealth transfer goes in the wrong direction: from taxpayers to the owners of fast-food outlets. In effect, the public helps restaurants and other lower-wage employers save on labor costs. As I see it, the cost of a full-time employee (someone working 30 hours or more a week) should be borne by the employer.

    Raising the minimum wage shifts the wealth transfer from the taxpayers to the restaurant owners. Boosting the minimum wage to $12 or even $15 diminishes or even eliminates this subsidy.

    Add your comment.


  25.    The economic damage from the Nepal earthquake is almost half of the country's GDP – Quartz

    The initial estimates of the economic damage caused by the April 25 earthquake in Nepal are in—and the numbers are staggering.

    The overall damage is estimated to be at about $10 billion, according to the Nepal government—nearly half of its gross domestic product (GDP) of $19.2 billion.

    Add your comment.


  26.    [357] China's malinvestments and the forex rigging settlement – YouTube

    Pretty good segment covering China, among other things:

    Add your comment.


  27.    How Should a Real Estate Investor Go About Building Their Team? [#AskBP 025] – YouTube

    On this episode of the #AskBP Podcast we're talking all about teams. No, not baseball or football teams, but your real estate team. In today's show you'll learn about all the members you should have on your team – and what members you NEED to get on board right now.

    Can you think of any other classifications for team-member designations?

    How about property inspector? Are you qualified to find all the problems in a property? When you buy a used car, do you always take it to a good mechanic to look it over first? If you're a great mechanic, you still might want a second opinion and especially if it's your first purchase!

    How about a clean-up crew? If you're going to buy a "dump" full of trash and perhaps dangerous mold, who will clean it enough even before the remodeling/construction crew moves in to work?

    How about a great landscaping crew? Your building contractor/remodeler is probably not the right party to undertake that work, though he or she may subcontract that type of work (however, you'll be paying a premium that way).

    How about a title agent? Your real estate broker probably has a good line on title insurance, but developing a good working relationship with a highly knowledgeable title agent can help with streamlining closings, etc.

    If your business booms, check into an estate planner too.

    Add your comment.


  28.    How to Stain Wood – YouTube

    Not all staining is simple. Learning to stain wood can take some practice — and it's sometimes best left to the pros. Use this video & guide to help you decide whether you'll DIY or hire a guy.

    …or gal.

    Add your comment.


  29.    1776: The Revolt Against Austerity by Steve Pincus | NYRblog | The New York Review of Books

    What alternative strategy did the authors of the Declaration propose? Today, we tend to regard the practice of using government spending to stimulate economic growth as an invention of John Maynard Keynes in the 1930s. But already in the eighteenth century, self-styled Patriots, followers of Pitt on both sides of the Atlantic, argued that what the British Empire needed if it was to recover from the fiscal crisis was not austerity but an economic stimulus. In the midst of the crisis one journalist wrote that Pitt and the Patriots believed that the burgeoning debt could be reduced by increasing "the national stock," or Gross National Product, whereas Prime Minister Grenville believed "that an hundred and forty millions of debt is to be paid by saving of pence and farthings."

    … Had George III and his ministers not adopted austerity measures in the 1760s and 1770s, had they chosen to follow Pitt's policies of economic stimulus, America's founders might not have needed to declare their independence at all.

    Add your comment.


  30.    LA's New Minimum Wage Isn't Worth Anywhere Close To $15 | FiveThirtyEight

    Los Angeles's minimum wage won't go up to $15 tomorrow. Instead, the hike will be phased in over the next five years. Assuming inflation holds more or less steady, $15 an hour in 2020 will be worth the equivalent of about $13.75 today.

    But the bigger issue is that $15 doesn't go as far in Los Angeles as it does in most of the rest of the country. Not even close. According to data from the Council for Community and Economic Research, it costs workers about 40 percent more to live in Los Angeles than in the average American community. That means that $15 in LA is the equivalent of less than $11 in the U.S. overall.

    Put the two together and LA's new minimum wage of $15 in 2020 is worth about $9.75 to the typical American worker today.

    Add your comment.


  31.    Grand Central: Is the Fed's 2% Inflation Target Too Low? – Real Time Economics – WSJ

    Minutes of the Federal Reserve's April 28-29 policy meeting, released Wednesday, shows officials debated whether the 2% objective is too low. One Fed official, unnamed as per tradition in the minutes, suggested the central bank should discuss raising it. In a higher inflation world, the Fed would have more room to maneuver with short-term interest rates, which have been pinned near zero since December 2008. It would have more room to respond if a new downturn were to emerge. It would allow the Fed to avoid another controversial bond buying program as an alternative to cutting rates.

    A higher rate would also very importantly allow for a lower unemployment-rate target (if one still buys the Phillips Curve).

    Add your comment.


  32.    Once-Unthinkable Criminal Pleas by U.S. Banks Get Investor 'Meh' – Bloomberg Business

    Barely more than a year ago, criminal charges against major U.S. banks were considered unthinkable, with lawyers and analysts viewing felony convictions as a death sentence and a threat to the financial system. Now, by granting waivers allowing lenders to keep operating even after a felony plea, the government has managed to punish firms while protecting them from fatal consequences.

    "Such prosecutions could represent a longer-term threat to these franchises," Jaret Seiberg, an analyst at Guggenheim Securities, said Wednesday in a note to clients. Criminal guilty pleas "may alter the political landscape by giving more ammunition to those who want to break up the biggest banks," he said.

    That's the point.

    Add your comment.


  33.    Rents Rising Faster Than Home Values | Zillow Blog

    Buying a home is already far more affordable than renting one, and that imbalance could worsen as rents outpace home values for the first time in years.

    Yes, and the reasons for this are centered around low wages, labor slack, high student-debts, and a lack of government incentivizing developers of affordable housing.

    The trend is not good.

    We are still suffering from the instability caused by the massive deregulation and privatization that brought on the Great Recession.

    Add your comment.


  34.    7 major housing markets now 'overvalued'

    Given that income growth is not even close to matching home price growth, certain housing markets are pushing past what is considered sustainable, based on the median income. Seven out of the top 100 metropolitan U.S. housing markets are thus overvalued, according to a new study by CoreLogic, a real estate analytics company. That's up from four just last fall.

    Add your comment.


  35.    A house that thumbs its nose at the drought

    Imagine a home that could recycle two-thirds of the water it uses. No need to imagine. New technology to do just that was recently approved for use in drought-parched California, and the company behind it claims it could be looking at a $15 billion business ahead.

    "In five years time, every new home will have a water recycler in it," said Ralph Petroff, chairman of Nexus eWater, the Australia-based company behind the technology.

    That's just barely the beginning.

    Add your comment.


  36.    New Luxury Rental Projects Add to Rent Squeeze – WSJ

    Of 370,000 multifamily rental units completed from 2012 to 2014 in 54 U.S. metropolitan areas, 82% were in the luxury category, according to CoStar Group Inc., a real-estate research firm. The firm defines luxury buildings as those that command rents in the top 20% of the market. In some places, including Denver, Tampa, Baltimore and Phoenix, virtually all new apartment construction has been targeted to high-end renters. In Atlanta, about 95% of new apartments have been in the luxury category.

    For years, many cities have offered a mix of tax breaks and incentives to encourage developers to build more moderate- and lower-priced apartments, while relying on the private market to provide middle-class rental housing. But now, experts say, the federal and local governments may need to consider targeting more subsidies not just to low-income, but also to middle-income renters.

    "If cities become places where only the very high-income households can afford to live…that's going to be a problem for the businesses that want to locate in those cities," said Ingrid Gould Ellen, faculty director of New York University's Furman Center.

    Add your comment.


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