Everett, WA Proposal for new multi-purpose stadium

 

EVERETT NEW STADIUM

 A local story here for those in my community. The city of Everett is taking significant steps to determine a potential stadium in downtown Everett. 

See below article link as well as a copy of the potential sites found on the Everett City Website below. 

EVERETT — The City Council unanimously approved creating a new committee Wednesday to conduct in-depth research and advise city leaders

Three options are on the table:

1)            upgrade the current Funko Field,

2)           demolish and build a new stadium on the current property, or

3)           construct a new stadium downtown near the Angel of the Winds Arena.

Everett needs significant upgrades to meet the new MLB standards. The city would be at risk of losing the minor league team if efforts to upgrade the stadium aren’t well underway by 2025.

The project could cost between $40 million and $80 million, according to figures presented by an outside consultant hired to work on the project.

For more information on Everett Commercial Real Estate, consider contacting an Everett Commercial Real Estate Broker. 

NY Landlord Rudin sees positive for CRE

 Bill Rudin sees positivity in the office market. He's mostly focused on NY city.

As we try to remain as neutral as possible despite our fairly negative / cautious outlook, it's important to look at the situation from all angles and make sure we look at all the 'pieces of the puzzle'. 

Weitz: My thoughts on this interview is 1) he leans on a lot of anecdotal evidence which I can't stand. "18 new Broadway shows are coming"; "we signed a lease". One perception doesn't make a big picture reality. I don't think we are going to truly see the the office issue resolved for years until we settle into a new normal with the work from home vs. hybrid vs 5 days in the office. This will vary industry by industry and company by company, but overall, I have to think management teams generally will want to lower their office footprint while also creating a office culture.

Janet Yellan warns inflation decline may not be "smooth"

Treasury Secretary Janet Yellen Interview release today. 

 

"Once rents cycle through, inflation will come down more"... "it take awhile for that to filter into the Consumer Price Index ('CPI'). 

Later in the interview, she said "I wouldn't expect this to be a  smooth path month to month, but the trend is clearly favorable". 

WEITZ: Let me interpret this... "(commercial) rents are falling, thus our current 'Consumer Price Index' / CPI numbers are crap. We are actually in more of a deflationary/ stagflation environment...but we are hiding the ball from the American public for whatever reason". 

I hate to say this, but I have zero faith in our current leaders to navigate what I believe is coming our way. 

In the later 2000s during the last major economic crisis, we had Ben Bernanke and Hank Paulson at the helm of Federal Reserve and Treasury respectively. Bernanke was a Princeton scholar on the Great Depression and Paulson was the former CEO of Goldman Sachs and carried a lot of weight on Wall Street. While I'd argue the bank bailouts benefitted the culpable parties and were thus were BS in some ways, that was the act of Congress and Obama at the time to not put guardrails on the use of the bailout funds.... Nevertheless, those two unequivocally saved us from a awful financial situation with collateral banking damage that likely would have mirrored a great depression like situation. I'm not so sure I have the same confidence in Mr. Powell or Ms. Yellen to navigate the ship if the 'waters get choppy'. 

Lets be frank - we have a debt based monetary system that can't withstand interest rates this high so if we are monitoring it based on crap CPI numbers, their analysis is equally crap and they will keep rates too high for too long.

CNBC - Homebuyers need to earn 80% more than in 2020 to afford a house in this market.

CNBC Article outlines the increased costs of housing in the past 4 years. 

Some key takeaways: 

Almost 4 years ago, household earning $59,000 annually could afford a new mortgage without spending more than 30% of their monthly income with a 10% down payment according to Zillow Group. 

While the typical household in 2024 makes about $81,000 / year (up from $66k), wages have not kept up with housing costs. 

Since January, 2020, the typical mortgage payment on the typical home has almost doubled, according a a senior economist at Zillow. 

Nowadays, a potential home buyers to make $106,5000 to afford a typical home.

Tight supply is another reason behind the unaffordability. 

The number of new housing  units built throughout the years has been declining and law supply is rooted in restrictive land use and zoning regulations. 

WEITZ: Nothing new here necessarily. Yes, affordability is a problem. Yes, low inventory is a key component of that. I continue to believe you will see an inventory increase as people 1) sell 2nd or 3rd homes; 2) we see distressed listings either in the form of defaults (job losses appear to be mounting); 3) divorce, 4) elderly people moving out of their homes or passing them to the next generation; or 5) people just wanting to move to a new area. 

I have a hard time seeing this entire pricing situation as sustainable. Fed Chairman Powell all but admitted he's trying to lower prices when the rate increases were established by the Fed. I personally think he's surprised by the resiliency to this point (as am I), but I don't know if he fully thought of the collateral damage that no one would sell their home with a 2.5-3% rate to buy something at 7% and thus we have created the most stagnant market of my lifetime. The next 12-24 months will be a tug of war between inventory vs. rates. If rates fall and inventory stays the same, we will see continued growth. If inventory grows and rates stay somewhat in line, I think we see some weakness in pricing in many parts of the country. If I had to bet, I'm betting on the latter of those two. I simply don't think these prices are sustainable for the average American (certainly not young american who doesn't have equity in a current home) although I certainly feel like the black sheep with that opinion these days. 

.... Time will tell. 

Biden Announces Plan to Lower Housing Costs for Working Families

In conjunction with his State of the Union address, President Biden & the White House announced A PLAN to lower housing cost for working families. 

Below are some of they points and any insights I can provide on the matter. I do my very best to keep politics out of any commentary so I'll make best efforts to be as neutral as possible in my comments. 

1. President Biden believes housing costs are too high, and significant investments are needed to address the large shortage of affordable homes inherited from his predecessor and that has been growing for more than a decade. 

Weitz- I'd agree that costs are too high for the average American. 

2. President Biden will call on Congressional Republicans to end years of inaction and pass legislation to lower costs by providing a $10,000 tax credit for first-time homebuyers and people who sell their starter homes; build and renovate more than 2 million homes; and lower rental costs. 

Weitz- Is a $10,000 tax credit going to do much if you can't afford the home in the first place? 

3. Mortgage Relief Credit. President Biden is calling on Congress to pass a mortgage relief credit that would provide middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years. This is the equivalent of reducing the mortgage rate by more than 1.5 percentage points for two years on the median home, and will help more than 3.5 million middle-class families purchase their first home over the next two years. 

Weitz- This math doesn't work in Seattle area, but I like the concept. 

4. The President’s plan also calls for a new credit to unlock inventory of affordable starter homes, while helping middle-class families move up the housing ladder and empty nesters right size. Many homeowners have lower rates on their mortgages than current rates.

Weitz- How? See below. 

5. The President is calling on Congress to provide a one-year tax credit of up to $10,000 to middle-class families who sell their starter home, defined as homes below the area median home price in the county, to another owner-occupant.

Weitz - so I go from a 2.5% mortgage at $700k so I can buy a 7%+ mortgage at $700k. That's a horrible move if the credit only lasts a year. On a $700k home loan, that's $32,000  increase annually, but thanks for the $10,000 tax credit!

6. Lowering Closing Costs for Home Mortgages. The Consumer Financial Protection Bureau will pursue rulemaking and guidance to address anticompetitive closing costs imposed by lenders on homebuyers and homeowners.  These charges—which benefit the lender but not the borrower—can add thousands to the upfront costs of a mortgage.  Those upfront costs cut into the amount of homebuyers’ down payments and reduce homeowners’ available equity.

7. Tax Credits to Build More Housing. President Biden is calling for an expansion of the Low-Income Housing Tax Credit to build or preserve 1.2 million more affordable rental units. Renters living in these properties save hundreds of dollars each month on their rent compared with renters with similar incomes who rent in the unsubsidized market.

8. Innovation Fund for Housing Expansion. The President is unveiling a new $20 billion competitive grant fund as part of his Budget to support communities across the country to build more housing and lower rents and homebuying costs. This fund would support the construction of affordable multifamily rental units; incentivize local actions to remove unnecessary barriers to housing development; pilot innovative models to increase the production of affordable and workforce rental housing; and spur the construction of new starter homes for middle-class families. 

Weitz - intrigued by this as would be my developer contacts. I have to say its a bit concerning that this is 1/3 of what many want to send to Ukraine.

9. Fighting Rent Gouging by Corporate Landlords. The Biden-Harris Administration is taking action to combat egregious rent increases and other unfair practices that are driving up rents.

I've keep an eye on this. I'll never be made a tax credits, but this doesn't seem to solve the issue although the grant program seems very intriguing. 

Fed Chairman Powell speaks at Senate Committee Hearing

 

While I'd expect exactly zero people to watch this 2.5 hour video, Chairman Powell sat for his "Semiannual Monetary Report to Congress".

Below are the highlights: 

The hearing comes after he told lawmakers on Wednesday that the central bank’s policy-setting committee still isn’t convinced that continued progress toward their 2% inflation objective is “assured,” and that it won’t make sense to cut interest rates until it is confident.

Powell told the House Financial Services Committee that he still expects cuts to come this year.

Powell noted that the inflation situation has “eased notably” over the past year, without any significant spikes in unemployment. The labor market remains “relatively tight” even as surging immigration has made more workers available.

The central bank head's testimony hit the same notes the public has heard from officials in recent weeks following the Federal Open Market Committee’s January meeting.

WEITZ - Simply put, I have zero faith the Fed will get this right. They were wrong about inflation being "transitory" and they will be wrong about sticking a soft landing. Time will tell, but I expect housing to start seeing trouble in '24 and the following years to be tough sledding....and that doesn't take into account the $1 Trillion in CRE loans that need to dealt with this year. 

For more information on Snohomish County Commercial Real Estate, consider contacting a Snohomish County Commercial Real Estate broker. 

Our Firm

Weitz Commercial

Scott@weitzcommercial.com

T: 206.306.4034

RXR CEO Scott Rechler Commercial Real Estate Update

Interview with RXR CEO Scott Rechler. He points out many of the issues I've discussed in the past few months. A detailed overview as well as my commentary can be found below.

"A trillion dollars of commercial loans are coming due this year". 

"The slow motion train wreck hasn't 'left the station". 

"The challenges haven't been dealt with".

Occupancy rates down 20% on office space. 

"There has to be acknowledgement of prices. The values being used by banks are in flux. 

The smaller and regional banks are facing the biggest hurdle. 

Banks referenced include KeyCorp (KEY), ZIONS Bancorp (ZION), M&T Bank (MTB), PNC Financial (PNC). 

WEITZ: Mr. Rechler always brings a great, well thought out honest take. There is nothing here that I would disagree with. Its going to take awhile for all of this to play out.

For more information on investing in Snohomish County Real Estate, consider contacting a Snohomish County Commercial Real Estate Broker. 

Our Firm: 

Weitz Commercial
Scott Weitz
T: 206.306.4034