Clockwise from top left: Federal Reserve hikes interest rates despite criticism from President Donald Trump; Report finds that homes across the U.S. are less affordable than they’ve been in 10 years; SoftBank halts its plan to buy majority stake in WeWork amid investor doubts; and Redfin reports that bidding wars on homes across the country are on the decline.
Federal Reserve hikes interest rates despite criticism from Trump
The Federal Reserve raised interest rates for the fourth time this year — putting them at their highest level since 2008. The increase came two days after President Donald Trump tweeted that it was “incredible that with a very strong dollar and virtually no inflation… the Fed [was] even considering yet another interest rate hike.” The benchmark federal funds rate now stands between 2.25 percent and 2.5 percent. In a statement, the Fed said that “job gains have been strong,” while noting that unemployment remains low and inflation stands at around 2 percent. [TRD]
Homes across U.S. less affordable than they’ve been in 10 years, states report
Home affordability is at its lowest levels in a decade, according to a report by real estate data firm Attom Data Solutions. Median home prices in the U.S. during the fourth quarter of 2018 were less affordable than they’ve been since the third quarter of 2008, the report said. New York, Miami-Dade County, Los Angeles and Chicago’s Cook County all saw substantial declines in their affordability index levels, which take into account how much of a person’s income is required to buy a median-priced home at any given time. [TRD]
Amid investor doubts, SoftBank halts plan to buy majority stake in WeWork
For months SoftBank Group had been considering a takeover of WeWork, but its investors have quashed the idea, the Wall Street Journal reported. The Japanese conglomerate would have shelled out $16 billion for a majority stake in the co-working giant, but sovereign wealth funds from Saudi Arabia and the United Arab Emirates felt that was too risky with WeWork expected to lose $2 billion in 2018. SoftBank head Masayoshi Son will have to turn to other investment sources if he wants to pursue a potential acquisition. SoftBank has already poured $8.4 billion into WeWork, which has been valued at $45 billion. [TRD]
Redfin report finds bidding wars across the country on the decline
Bidding wars on homes are happening less often than they used to, according to a new report from Redfin. The Seattle-based brokerage found that only 32 percent of the offers it made on U.S. homes on behalf of clients faced one or more competing bid last month, compared to 45 percent in November 2017. The firm attributed the dip in bids to a cool-down in the overall housing market. There are some zip codes, however, where competitive bidding still happens frequently, such as Washington, D.C., and Oakland and Orange County in California, according to Redfin. New York’s housing market, however, is reportedly headed for a slump. [TRD]
MAJOR MARKET HIGHLIGHTS
Google plans to invest $1B in a new campus in Manhattan
Fresh off the heels of Amazon’s HQ2 decision, Google has its own expansion news. The technology industry titan plans to invest $1 billion in a new, 1.7 million-square-foot campus in Manhattan’s Hudson Square neighborhood, parent company Alphabet announced on Dec. 17. “With these most recent investments in Google Chelsea and Google Hudson Square, we will have the capacity to more than double the number of Googlers in New York over the next 10 years,” Alphabet CFO Ruth Porat said in a blog post. Google bought the Chelsea Market building for $2.4 billion in early 2018. [TRD]
Documents show offers Chicago made in effort to land Amazon’s HQ2
Chicago offered Amazon at least $2.3 billion in incentives as part of its ultimately ill-fated bid to lure the e-commerce behemoth’s second headquarters to the Windy City, Crain’s reported. Chicago also said it would provide special service permits for construction work at the would-be headquarters, as well as at employees’ homes. The outlet obtained documents that show Amazon was interested in Related Midwest’s The 78 development in the South Loop. Chicago was still in the running late in the selection process, but Amazon ultimately went with Long Island City and Crystal City, a neighborhood just outside Washington, D.C., in Arlington, Virginia. [TRD]
Tom Elghanayan and spouse at Douglas Elliman snag $8.1M Palm Beach home
TF Cornerstone co-founder Tom Elghanayan and his wife, Douglas Elliman broker Madeline Hult Elghanayan, are the new owners of a Palm Beach home. The couple dropped $8.1 million for the 6,880-square-foot home at 235 Dunbar Road, buying it from Palm Beach real estate investor Barbara Stovall Smith and her husband Randall Smith, the Palm Beach Daily News reported. The Elghanayan family owns both TF Cornerstone and Rockrose. The couple’s new home was built in 1936 and comes with a guest house and a pool. [TRD]
Lawsuits claim utility company started the deadly Woolsey fire
A group of 170 homeowners have filed mass tort claims against Southern California Edison, accusing it of starting the disastrous Woolsey Fire, the Los Angeles Times reported. The lawsuits allege the utility company’s power lines arced an hour before the deadly fire started, sending out sparks and starting the blaze. The homeowners’ lawyers maintain Edison didn’t take the steps it should have to keep its electrical equipment in Simi Valley from starting the fire, despite the fact that blazes had previously broken out in that area. Edison didn’t immediately respond to request for comment about the litigation. One homeowner suing the company is Pro Football Hall of Fame member and former Los Angeles Rams running back Eric Dickerson. [TRD]
South Carolina city seeks to be the next Portland, Oregon
A city in South Carolina is hoping to become a hipster paradise akin to Portland, Oregon, the Wall Street Journal reported. Greenville, located in South Carolina’s northwest “Upstate” region, launched a three-day festival called Artisphere in 2005. Since then, the city’s real estate prices have been rising, and demand is high. Per Greenville’s Multiple Listing Service, 36 percent of the homes on its market are either new or haven’t even been constructed yet. “Agents are trying to keep listings in-house in their own offices before others hear about them,” Del-co Realty Group owner Lisa DeLuca Alexander told the outlet. “Buyers have to come in over asking [price].” [TRD]
Four DC neighborhoods land on list tracking largest increase in high-earning residents
The 10 neighborhoods that saw the greatest increase in high earners included four in Washington, D.C., according to an analysis conducted by consulting firm Webster Pacifics. Census tracts in Chicago, Florida, Houston and New York also landed in the top 10, Bloomberg reported. The analysis considered residents earning more than $200,000 per year to be high earners. Fisher Island in Miami has the wealthiest residents in the country, according to the analysis, which found that Chicago’s Cabrini Green neighborhood — once home to a notorious public housing project — had the greatest increase in high-earning residents. [TRD]
Source: The Real Deal Los Angeles