UCLA Real Estate Wire

Do Liberal Cities Block Real Estate Development?

This piece in the WSJ today offers a data point that says "yes".

On the Waterfront

While critics of development often fight planned projects in courts and city council chambers, a group of opponents of a proposed downtown San Francisco condo project on the waterfront are looking directly to voters.

The opponents, who have dubbed the 112-foot development "Wall on the Waterfront," qualified for the ballot in late July, after they collected 31,000 signatures.

The project, officially called 8 Washington, would block views of the bay and hurt the character of the neighborhood, says Jon Golinger, who directed the ballot campaign. The project, he claims, would create a "feeling that you're in Anywheresville, U.S.A.," rather than San Francisco.

In turn, P.J. Johnston, a spokesman for 8 Washington, says the building is shorter than office buildings nearby, and the opponents are a well-financed group that has been misleading the public on the project.

"San Francisco has an entrenched network of NIMBY activists and lawyers," says Mr. Johnson, adding that although he has known the city to be filled with "professional obstructionists" that "this one takes the cake."

The issue has some time before it goes to vote. It is slated to come before voters in November 2013, when residents would decide whether to overturn an approval of the project by the San Francisco Board of Supervisors, which previously approved the project.

—Kelsey Gee

For those who want to see an academic paper that further studies the question of whether liberal cities block new housing click here.  

 

 

An Obituary for Samuel Lindenbaum of NYC

New York City has a complicated set of zoning rules that make it harder for real estate developers to start and finish new projects.  Today the NY Times has published an obituary for Samuel Lindenbaum who was a master of navigating the zoning code.   His life offers an interesting example of "value added" in the real estate industry.  Here is a quote:

"Mr. Lindenbaum cultivated a scholar’s knowledge of theZoning Resolution, the arcane document that governs development in New York. As a result, he was able to bend the resolution to his clients’ will without breaking it. And because his clients were major builders and landowners — among them Harry B. Helmsley, Harry Macklowe, Larry A. Silverstein, Jerry I. Speyer, Leonard Litwin, Steven Roth and Donald J. Trump; the Fishers and Tisches and Rudins and Roses; the Metropolitan Museum of Art and the Museum of Modern Art — Mr. Lindenbaum’s imprint was enormous.

His interpretations sometimes seemed to contradict the plain meaning of the resolution. For instance, in 1992 he and his colleagues convinced the City Planning Commission that the public would actually gain by losing public space at the former AT&T headquarters on Madison Avenue, which was being renovated as Sony Plaza."

 

 

 

Introducing the UCLA Economic Letter

We are excited to launch the UCLA Economic Letter with our first edition, “Rebuilding the Housing Economy: The Multi-Family Boom Will Lead to a Rebound in Homeownership" by David Shulman. This is the first in a series of condensed analyses of crucial real estate and economic issues offered by the UCLA Anderson Forecast and the UCLA Ziman Center for Real Estate. Here, UCLA Ziman Center and UCLA Anderson Forecast Senior Economist David Shulman examines the potential for a recovery in the housing sector. Download the PDF.

The UCLA Economic Letter is the monthly communication of the UCLA Anderson Forecast and the UCLA Ziman Center for Real Estate. The Letter aims to provide new insights as to the major economic and  real estate issues of the day in a quickly digestible format. In so doing, it draws upon original research, policy analysis, and forecasts produced by UCLA academics and Forecast economists. At the same time, it addresses the most pressing issues confronting us all. As the premier public university, it is the mission of the University of California to serve society as a center of higher learning and to provide long-term societal benefits through the discovery and transmission of advanced knowledge. The UCLA Economic Letter series seeks to support that mission.

NBA Legend Michael Jordan's Bad Investment in Chicago Real Estate

Even superstars such as MJ sometimes make bad investment choices.  This piece  provides the details about his investment in a luxury gym in Chicago. It seems that the recession has clipped demand for such a product.   

Rental Flow Securities?

Forget mortgage backed securities,  the WSJ reports that a new product is bundles of rental streams from real estate and in particular real estate that was owner occupied single family housing but now is a rental unit.  This article interests me because I've been thinking about buying some real estate as an investment.  If my wife and I buy a small home and then rent that out, that's one source of income.  Perhaps a more diversified source of real estate income would be to buy shares of a bundle of rentals and that is what this new security is meant to be.  The problem that the WSJ discusses is what "bond rating" should this investment receive? Is it a "safe investment"?   Fitchs says that it is having trouble finding a statistical model for predicting the likelihood that renters don't pay their rent.  If renters don't pay their rent then a security whose asset is "total rent collected" will be of less value.  So, just as we need statistical models of mortgage default we also need statisical models of the probability that a renter doesn't make a payment.  The only people who would have access to such data are owners of large apartment buildings but this raises an "apples and oranges" issue.   You could use data on rental payments and household demographics to quantify what % of white women over the age of 55 who are renters of an apartment in a multi-family housing complex pay their monthly rent but would this estimate be informative about the probability that a woman with similar demographics would pay the rent for a single family house?   So, I'm puzzled about whether I would prefer to invest in this new asset or be "conventional" and purchase another house and rent it out.

 

Should You Buy Land in Merced, California?

In his new book, UCLA architect Thom Mayne argues that you should!   Last year, the NY Times wrote a piece about the large number of deeply discounted McMansions on the market in Merced.  Has Prof. Mayne been purchasing these homes?  Should you consider doing so? He argues that that Merced is a funky hybrid of being a leading agricultural center and that a nascent city is forming around the new UC Merced campus. He also sees a synergy as high speed rail brings Merced "closer" to California's mega-cities.  

Will Rising London Real Estate Taxes Increase Superstar Demand to Live in NYC?

Economists love to talk about "cross-elasticities". In English, if the price of Toyota vehicles sharply increase, how much does demand for Mercedes increase by?  That's a cross-elasticity.  The NY Times today has a piece about rich international real estate buyers.  We all know that London and New York City and Los Angeles compete for the "high rollers".  This piece argues that NYC's high end apartment owners and Don Trump (sellers of high end apartments) could be the big winner from London raising taxes on real estate. 

Has the Federal Reserve Done Enough to Stimulate the Economy?

In my recent op-ed in Real Clear Markets, I argue that it hasn't and offer a proposal that would give the Fed more leeway to ease policy.