UCLA Real Estate Wire

REIT: "Inflation, Interest Rates, and All That Jazz"

"In a January 2021 letter, REITland vet David Shulman, Senior Economist Emeritus for the UCLA Ziman Center for Real Estate and the UCLA Anderson Forecast, writes that asset-price
inflation could trigger an increase in consumer price inflation, from its current low levels.

Shulman writes: 'The cover story of the December 12-18th edition of The Economist was headlined, 'Will Inflation Return?' The article discussed the recent history of why consumer price inflation, running at a low year-over-year rate of 1.2% as of November, has been so quiescent. However, there is another type of inflation that has been soaring. I am speaking of asset price inflation which is showing up practically everywhere.'"

[REIT: 1/13/2021]

Los Angeles Business Journal: "LA Office Market Takes a Hit"

“'The reason why it hasn’t been hit as hard is long leases,” UCLA Anderson economist David Shulman said. “And firms are still making money even though people are not in the office.'

But the market did see a negative 755,000 square feet of net absorption."

[LABJ: 8/3/2020]

Curbed Los Angeles: "You can now buy a piece of Echo Park for $100"

"Paul Ong, an economics professor and director of UCLA’s Center for Neighborhood Knowledge, says there are more democratic forms of landownership, like community land trusts, which don’t exist to make a profit. Benefit corporations like Nico might set out to do good, he says, but 'in our market economy there are incentives and pressures to mold behavior around maximizing profit to the degree that your noble ideas become secondary.'

On the other hand, if you’re profit-driven alone, Nico’s holdings may ultimately be too small to make any significant returns for investors, says Eric Sussman, an adjunct accounting professor at UCLA and partner at Clear Capital LLC.

'I’ve never seen a real estate investment trust own so few properties,' he says. 'If this whole approach is to allow renters to get a piece of the action or somehow invest in their own units, I think there are less expensive, more liquid, better ways to go about doing it.'"

[CLA: 6/4/2020]

GlobeSt.com:"Why Tech Firms Will Focus on Profitability Over Growth in 2020"

" 'Venture capital will no longer fund these continuous losses any more. They will stop funding these companies until they see a path to profitability,' David Shulman, senior economist for the Ziman Center and UCLA Anderson Forecast, tells GlobeSt.com. 'Tech firms will have to go for profitability as opposed to just going for growth.' "

[GS: 1/6/2020]

Washington Post: Are transit-oriented developments the answer to the affordable housing shortage"

"Paul Habibi, a professor at the University of California at Los Angeles’s Ziman Center for Real Estate, said there is a shortage of 500,000 affordable units in Los Angeles, which TODs can help address.

" 'There’s a widespread belief that the affordability problem needs to be solved from the supply side,” Habibi said. 'Density is one mechanism by which to have that happen, because developers can increase the number of units in any given community.'

"He added that reducing parking requirements is key because parking can add $100,000 to the cost of building a typical condo, which is then passed on to the resident."

[WP: 11/21/2019]

Bisnow: "Top CRE Execs Answer 3 Important Questions On The Future Of WeWork"

Eric Sussman Adjunct professor of accounting and real estate, UCLA; Founding partner, Clear Capital LLC; Los Angeles

Will the attitude of landlords and the office market toward WeWork change after everything we’ve learned?

No question. I have no doubt that WeWork’s reputation will absolutely tank. It has to. If you look at it from a landlord’s perspective, similar to how they underwrite, they look for the three C's — credit, collateral and character. If you were to analogize this to the landlord market, well, what’s [WeWork’s] credit? That has gone down. Their collateral is now similarly downgraded. And thirdly, character. There are a lot of stories coming out about Mr. Neumann. I know he stepped down, but character seems to be lacking in a number of areas.

[BN: 10/6/2019]

Los Angeles Times: "Southern California home prices were flat and sales fell in August"

"Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA, said consumer concerns about the broader economy have played a role in the housing slowdown. He said cheaper financing shouldn’t be viewed in a vacuum.

" 'The lower interest rates are there for a reason,' he said, referring to rates cuts the Federal Reserve has undertaken to bolster the economy.

"A UCLA Anderson Forecast, also released Wednesday, doesn’t predict a recession, but rather slowing GDP growth this year and next. Gabriel said that should be enough growth that the housing market doesn’t fall off a cliff, but also doesn’t enter a new boom period."

[LAT: 9/25/2019]

Los Angeles Business Journal: "Wealthiest Angelenos: Land Lovers"

"Appreciation of real estate across all asset types helped bolster the net worth of developers and long-term property holders alike.

" 'Ever since we got out of the last recession, the real estate market has generally fared very well,' said Paul Habibi, a lecturer in real estate at UCLA. “The market is very stable, especially in industrial and multifamily. We’ve seen good growth in value of properties.'

"From April 2018 to April 2019, L.A. single-family home values increased 3.3%, according to data from CoreLogic Inc." 

[LABJ: 9/20/2019]

Forbes: "Latest News On Flipping Homes For Quick Profits"

"In areas where home prices increased combined with higher mortgage rates, the pool of buyers decreases making flipping inherently riskier and ultimately not so attractive. Continuing Lecturer of Finance and Real Estate at UCLA Anderson School of Management Paul Habibi explains the fundamentals. “The big decline you see is from the amateurs who want to invest in a market where they see an upward trajectory. That’s what people look to take advantage of,” Habibi explains. “You can do a lot of things wrong in an up-trending market which can save you from your mistakes. That changes when the market changes and it filters out upstarts who don’t really know what they are doing,” Habibi said not mincing words. Financing has gotten trickier on those deals, weeding more players out of the game."

[F: 1/30/19]

Curbed LA: "Are Los Angeles home prices finally about to dip?"

"Eric Sussman, adjunct professor of accounting and real estate at UCLA, agrees. “I don’t think there’s any question that the housing market is slowing,” he says, adding that he “wouldn’t be surprised” if prices in LA start dropping “in the next few months.” If the market cools off in coming months, says Sussman, rising mortgage interest rates will likely be to blame. Since September 2017, interest rates on conventional home loans have shot up nearly a full percentage point."

[CLA: 8/17/18]