US

(New York)

With the stock market as nuts as it is, there has been preciously little talk about the real estate market. While housing did somewhat dodge a bullet because interest deductions were not entirely done away with in the recent tax overhaul, some think the market is ripe for a big fall. By some indicators, the market is overheated, with hefty price gains and wide optimism, leading some to hear echoes of 2005. However, generational factors seem likely to bolster the market as Millennials age into home ownership and Baby Boomers sell their homes and move into assisted and planned communities.


FINSUM: The market probably won’t fall legitimately until we have another recession. However, given the fact that Millennials (the largest generation) are just entering the home buying age, it appears there will be robust demand for years.

(Washington)

Here is a head-spinner: the US is the world’s new tax haven, at least according to Bloomberg. That is a huge shift for a country whose tax policy used to compel companies to reincorporate overseas in “tax inversion” deals. But it is actually a different policy that has made the US a tax haven—a lack of reciprocation in data sharing. Unlike many of its overseas counterparts, the US government cannot compel banks to disclose balances or beneficial owners of accounts, letting wealthy foreign citizens stash cash in US banks to evade foreign taxes.


FINSUM: This may be good business in the long run, but having a standard that others must abide by, but not doing so itself, is the kind of practice that undermines relations with other states.

(New York)

There is a significant sector of the real estate market that looks like it may be set to go through a tough stretch. That sector is office space. Starting three years, new office construction began to surge, leading to a buildup in office inventory. That construction continues today, and now ratings agency Moody’s is warning about the risk. At the same time, demand is supposed to weaken, meaning there will be a lot of vacancies. While that may be good for tenants, it will be bad for creditors and bondholders, and cash flow could weaken.


FINSUM: Credit growth in the space has been relatively restrained, so we are not expecting a big reckoning here.

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