2019 Housing Outlook

Expect housing in 2019 to be flat. The recent decline in mortgage rates from 5% to 4% for the 30-year-fixed provides some support for housing.  However, the tax-law change, which took away many of the tax benefits of homeownership, weighs on demand. The impact of the new tax law is still filtering through the housing market, particularly in more expensive markets like California, and Florida, where those tax benefits are more important. Affordability remains an issue. The runup in house prices over ... Read more

Regal Properties Voted “San Diego’s Favorite” Real Estate Company

Again, in the 2018 “San Diego’s Best” Union Tribune Readers Poll, readers nominated and voted for their favorites in various business categories, selecting Regal Properties as their Favorite in 2 categories this time – Real Estate Brokerage and Commercial Real Estate Company. We are honored and appreciative to receive this recognition, from our clients, colleagues and business partners. Regal Properties proudly “Invests in People and Property” by donating 10% of all fees and commissions ... Read more

Regal Properties Closes $14,900,000 Retail Acquisition at 8.6% Cap

Regal Properties' Senior VP, Maha Odeh, represented the buyer, Laguna Village Plaza LLC, in the $14,900,000 purchase of a 102,000+ retail shopping center at 5945 W. Ray Road in Chandler, Arizona, for an 8.6% cap rate, with a loan of $9,600,000.  The center is anchored by Walgreens, Natural Grocers, and CCV Church.  Escrow closed on on August 15, 2018. Read more

Unaffordability Means Fewer Homebuyers

Mortgage applications hit a near 4-year low in July, dropping for the third month in a row.  The causes include: (1) homes are overly expensive now due to tight inventory and rising interest rates, (2) wage growth has remained stagnant while the costs of living (including rent) have continued to climb, such that saving money to buy a home has become increasingly difficult.  Something has to give… Read more

Starbucks Feels the Heat of Competition

Amid slowing growth in an increasingly crowded market, Starbucks announced it will close 150 under-performing, company-operated U.S stores in 2019. Historically, the Seattle-based chain has closed about 50 stores per year. The upcoming store closings will occur primarily in urban markets saturated with Starbucks locations. However, Starbucks’ sales are also slowing, as the company expects just 1% growth in same-store sales for the third quarter of 2018—the worst performance in about nine years.  One ... Read more

Expect Chinese Investor Sell-Off to Impact CRE Values

Chinese investors are dumping their commercial real estate investments, under pressure from the Chinese government as a result of the escalating trade war between the U.S. and China.  According to an article in the Wall Street Journal, Chinese investors sold $1.29 billion of U.S. CRE in the second quarter of 2018, while purchasing less than 1/10th of that amount. This is the first time the Chinese have been net sellers in 10 years.  Just ... Read more

San Diego Economy Shows Signs of Slowing

The University of San Diego‘s latest economic forecast showed the second monthly decline in a row, raising concerns about a slowdown in the local economy.  The Burnham-Moores Center for Real Estate’s Index of Leading Economic Indicators for San Diego County, released last week, fell 0.2 percent in May following a decline of equal magnitude in April.  A decrease in help-wanted advertising, higher initial claims for unemployment insurance and a decline in residential building permits ... Read more

Tax Free Real Estate Investments in Opportunity Zones

Under new tax laws, investors can defer tax on any prior real estate gains until December 31, 2026, so long as the gain is reinvested in a Qualified Opportunity Fund, an investment vehicle organized to make investments in Qualified Opportunity Zones.  In addition, if the investor holds the investment in the Opportunity Fund for at least ten years, the investor would be eligible for a step up in basis equal to the fair market ... Read more

Marijuana Law Update

Of the 29 states having approved medical marijuana sales, only 3 have approved sales for recreational use.  State and federal laws still clash, because all marijuana sales are still illegal under federal law.  Hence, marijuana is still an all-cash business because credit cards and bank accounts are federally controlled.  Given cash caps on real estate transactions, commercial property owners and managers risk running afoul of federal money-laundering laws by accepting cash rents. Although Trump ... Read more

Green Street Researchers Warn of Declining CRE Values

Commercial real estate investors can expect property prices to trend downward soon, according to Green Street Advisors, a real estate research firm headquartered in Newport Beach, California. “Value appreciation has practically stopped in aggregate,” said Joi Mar, senior analyst at Green Street.   However, sectors vary. Industrial—especially last-mile industrial—has seen rising values, and malls have seen big losses, she noted. Prices on industrial assets recorded an 11% gain year-over-year, while mall valuations have dropped by ... Read more
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