Displaying items by tag: new york

(New York)

New York is the epicenter of the US coronavirus crisis, and the hit it is taking to its finances may be an example of the risk that the muni bond market is facing all across the country. Government revenue is taking a huge cut at the same time as expenditure to support the economy and its people is jumping. While the threat of a downgrade from its AA perch is only moderate, New York does have several other muni issuers that are looking much more dangerous. For example, the Metropolitan Transit Authority (MTA) and the Transitional Finance Authority (TFA). The MTA, which runs the subway and other forms of public transportation, has taken a massive revenue hit during the lockdown, with ridership down 90%.

FINSUM: Certain muni credits are gong to be devastated. For instance, even though the MTA is getting $4 bn from the recent CARES act, it is still yielding 5% versus the 2% it yielded before the Covid eruption.

(New York)

Is New York a bellwether of US real estate performance or is it an isolated enclave with no real relevance to the majority of the country? Hard to know, but if the former, then there is a lot to worry about. NY home sales are plummeting and just showed their worst decline since the Financial Crisis. Median sales prices in Q3 dropped 12% from the previous year, the sharpest drop since 2009. Average home value fell below $1m for the first time in four years.

FINSUM: In our opinion, this is idiosyncratic to New York. The city is seeing a huge flux of newly built apartments that are boosting inventory, and at the same time there is a new progressive mansion tax hurting demand.

(New York)

Governor Andrew Cuomo of New York has just announced that he will sign a dramatic bill which overhauls New York’s rental market. The bill would make permanent laws which govern over one million apartments in New York City. The bill needs to pass through the state’s Assembly and Senate on Friday, but if enacted, would greatly limit landlords’ ability to work around rent control regulations. “We believe this is going to be a huge shift in the ability of people in New York City and the surrounding areas to live in their communities comfortably without fear of being displaced”, says Senator Brian Kavanaugh.

FINSUM: Looking at the details of this bill, it appears more an effort to get votes by saying ”we froze rent increases”, than it is a well-thought out plan. We wonder if this will have an impact on the growing package of incentives wealthy people have to leave the New York area.

(New York)

The term that property owners and landlords generally cringe at hearing is echoing in cities all across the US. That term is rent control. Oregon passed a law this February to cap rent increases at 7% plus inflation, and now many other locations, including Colorado and New York are considering such measures. In some instances, it is a matter of repealing an existing ban on rent control, which would then let cities set their own rules.

FINSUM: The biggest hit to public markets from the spread of such measures will be in apartment REITs like Equity Residential, AvalonBay Communities, and Essex Property Trust.

(New York)

Real estate across northern cities is taking a pummeling right now. There appears to be a significant exodus of wealthy homeowners leaving high-tax northern states like New York and New Jersey in favor of sun belt areas with lower taxes. The big catalyst for the move has been the elimination of SALT deductions above $10,000. Florida, for instance, has no state income tax and no estate tax. Accordingly, Miami, as well as other sun belt cities like Las Vegas and Phoenix, have seen real estate markets holding up well compared to the trend across the north.

FINSUM: Northern states are going to have to adjust (assuming the federal government doesn’t change policy) as the logic is just too simple for people right now: “should I live in a cold place with high taxes, or a warm place with great weather and low taxes?”.