Several cities that were widely favored, but ultimately passed up, during Amazon’s highly publicized search for its second headquarters experienced what some called the “Amazon effect”: More businesses showed interest in relocating to cities like Atlanta after Amazon announced it wouldn’t choose the city for its HQ2. But one of the places Amazon chose, Long Island City in Queens, New York, has already seen a very different sort of “Amazon effect,” as the New York Times explains.
Specifically, condo owners and developers in the neighborhood, located just across the East River from Manhattan, have already seen a surge in sales and prices in the weeks since Amazon announced it would hire around 25,000 new employees to staff a massive new operation. While the bulk of those new hires won’t be chosen for another year or more, apartments and condos around where Amazon will open its first Long Island City office have already seen a surge in demand. According to brokers who spoke with the Times, multimillion-dollar offers are being made sight-unseen on units that aren’t even finished yet. Another property owner who said he had purchased his Queens condo for $848,000 nine years ago was now putting it on the market for an additional $1 million, after making a few upgrades.
“We’re the only neighborhood in New York that is a seller’s market,” Patrick W. Smith, the broker handling the transaction, told the Times. “This has always been a growing and desirable neighborhood, but since the Amazon announcement, we’ve been catapulted by unprecedented national and international exposure.”
- Michael Lewis’ book-turned-film “The Big Short” made the public more familiar with the forces that kicked off the Great Recession, as well as how a few intrepid traders made a fortune by betting against the mortgage market. Now, The Wall Street Journal reports that some firms continue to profit from bets based on soured home loans, but from a different angle. According to the Journal, a hedge fund named Fir Tree has earned around $2.6 billion since the housing crash by purchasing a handful of the millions of home loans in the U.S. that fell underwater in the last decade. Unlike those profiled in “The Big Short,” who bet against sketchy mortgage-backed securities by short-selling them, Fir Tree scooped up some of those bonds at fire sale prices. The firm’s profits came from the fact that many underwater borrowers resisted the urge to walk away and instead kept paying off their mortgages, even though their homes were worth less than the loan itself. In other cases, Fir Tree won settlements from mortgage originators after proving that the loans were written fraudulently or irresponsibly. Some analysts estimate that of the tens of millions of homeowners who fell underwater on their mortgages in the last decade, only 3 percent chose to default. The rest continued to make payments and even escape the debt trap, benefitting firms like Fir Tree.
- In an overview of the international luxury home market, Mansion Global predicts 2019 will be “the year of the vanishing home buyer” thanks to a confluence of factors. But the brunt of the anticipated downturn may be focused overseas. High-end markets in Sydney, London and Dubai are expected to see sales continue to creep lower thanks to slowing economic growth and new taxes. On the other hand, some of the top luxury markets in U.S. cities like Miami and San Francisco are facing a much brighter future. Buyers from all over the U.S. and the rest of the world continue to flock to Miami, snapping up its surplus of high-end residences. Meanwhile, growth on the West Coast seems poised to continue, although at a muted pace compared to previous years. Mansion Global named rising interest rates, tax changes and an uncertain political climate as the top risk factors for the global luxury market in 2019.
- Trade negotiations between the U.S. and China are ongoing and have already led the U.S. to call off plans to escalate tariffs on Chinese imports next year. However, The Wall Street Journal reported Dec. 25 that the duties already in place have had a noticeable impact on the home remodeling industry. Due to new tariffs on a broad variety of Chinese-made goods, prices for several common remodeling materials have grown, according to data and interviews with vendors and suppliers. The cost of kitchen cabinets from one manufacturer in North Carolina, for example, increased 10 percent due to tariffs. The Journal estimated that new cabinets comprise 40 percent of the budget for a typical kitchen remodel, and 70 percent of the materials used are imported from China. Prices for lighting have increased as much as 15 percent. While lighting only accounts for 3 percent of the average remodeling budget, more than half of the necessary materials are imported from China and subject to tariffs.
- Data on new home sales in November won’t be published by the U.S. Department of Commerce as scheduled this week due to the ongoing partial government shutdown. The Census Bureau, which operates within the Commerce Department, is one of the many federal offices that will remain closed until Congress and the White House come to an agreement on a continuing resolution to fund about 25 percent of the federal budget. As of Dec. 27 it was unclear when the shutdown would end as it entered its sixth day.