I am the sole owner of a plot of land. Can I write a joint power of attorney to my two sons so as to enable them to sell or register that by mutual agreement and later share the amount?
— Name withheld on request
It is possible for you to give a joint power of attorney to your sons to enable them to sell the property and receive the proceeds thereof. However, such a power of attorney under which the right to sale is proposed to be given to the attorneys will require stamping on the market value of the property and registration.
You may want to think about agreeing clearly with your sons on the sharing ratio of the amount, to avoid any disputes in the future. We assume the ratio will be 50:50, but it would be important to have this documented in writing.
You can think about a Will leaving the said land to your sons equally (or any other ratio)—obviously, this is a longer-term proposition after your lifetime, but this is more cost-effective (depending on the quantum of stamp duty payable as above). You can consider gifting them the property as well, during your lifetime. A discussion with your attorney would help you understand the range of options, and their pros and cons.
I want to bequeath the money in my Employees’ Provident Fund (EPF) to my son. In the unfortunate event of my death, is this amount protected against my son’s liability?
— Pankaj
As per the provisions of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, the amounts standing to the credit of a member in the EPF are protected from attachment under any decree or order of any court in respect of any debt or liability incurred by the member prior to his death.
Accordingly, as per your will, your son will be entitled to such amounts from your PF account. However, this will not be protected against any liability incurred by your son pursuant to your demise. In other words, such protection is limited vis à vis your liabilities, and will not extend to your son’s liabilities after it has passed to him.
We, however, recommend that your son be made the nominee under the EPF scheme to ensure hassle-free transfer of the money.
Rishabh Shroff is partner & co-head Privant Client, Cyril Amarchand Mangaldas.
Renting an apartment in New York City this summer? Say hello to sky-high prices and a fight to the finish.
Amid the heat and the occasional rain, there’s a mad scramble to rent affordable apartments in Gotham, which has been undersupplied for many years. Real estate agents describe the mayhem when it comes to prices.
“It’s nuts,” Jessica Peters, a real estate agent with Douglas Elliman, told MarketWatch. “We can’t even keep up anymore. We’re, like, let’s just put up this crazy number, and we’re getting it.”
Offices in the city are trying to woo more employees back: The city is not near full capacity yet — foot traffic to office buildings in NYC is still down 40.6% compared to pre-pandemic levels. But some workers are coming back, restaurants, movie theaters and Broadway are back, and college students are preparing to start school.
Consequently, the median monthly rent is up $725 in June on the year and $59 on the previous month, according to Zillow. The median monthly rent in NYC is $3,300, 53% higher than the national median of $2,155.
“‘A lot of renters will be in for a rude awakening.’”
Peters said that the reality was far worse on the ground. “I just rented something … in Williamsburg. It’s a great two-bedroom ground floor unit, with a big backyard,” she said. “We were asking $6,500. We got $7,000.”
Peters, who specializes in the Brooklyn area, said that while rental prices may be fluctuating a little, the reality is clear for someone looking to be in the city.
“If you’re coming back after not renting in either Brooklyn or Manhattan in the last ten years, a lot of renters will be in for a rude awakening,” Peters added.
(Reminder: Realtors and real estate agent make money on a commission basis, meaning the hotter the market, the higher their earnings.)
That said, the rental market in New York is reflecting a broader intensification of the inventory pressures, which is leading to bidding wars among renters across the country.
But in New York, one of the most expensive cities in the U.S., even some tenants in rent-stabilized apartments cannot catch a break. The city’s Rent Guidelines Board has signed off on hikes as high as 3.25% for new one-year leases, and 5% for two-year leases.
One of Gartenberg’s open housing listings in the Two Bridges area of Lower Manhattan.
Screenshot from Streeteasy.com
Mihal Gartenberg, a real estate agent with Coldwell Banker Warburg, said the market’s wrath was normal; it was just operating on a demand-and-supply basis.
There are people who are simply willing to pay more, he said. “It’s getting to the point where we’re not the ones deciding what these are going for,” Gartenberg added. “This is a true market enterprise.”
Technology was aiding some renters in their search for a home.
A two-bedroom luxury apartment she put on the market for rent two months ago in the Lincoln Square area attracted people streaming in during a two-hour open house in ten-minute increments, on top of prospective renters who joined on FaceTime
AAPL,
“We priced it in my opinion… quite high,” Gartenberg said, at $7,800, “but we ended up taking even more. The person who ended up taking the apartment offered $400 more… we had an offer of $8,200, and they also offered to pay the broker fee, which is an additional month.”
“‘I feel very uncomfortable with this idea that the first person to see a listing is the first one to get it.’”
Over this past weekend, she had open houses for two apartments in the Two Bridges area in lower Manhattan.
“I’m only going to be showing it at the open house. I like to have a level playing field,” Gartenberg said ahead of the event. “I feel very uncomfortable with this idea that the first person to see a listing is the first one to get it.”
Buying a home was worth considering, the real estate agents said, given how intense the rental market has become.
Peters said many renters are attempting to become homeowners because rents have risen so dramatically. “People are starting to reevaluate whether or not they should just purchase at this point,” she said.
“Why would I want to spend $10,000 a month on a rental if I qualify for a purchase? It might not be exactly what they wanted, it might be slightly smaller, but it’s still going to be better than spending $120,000 a year in rent,” she added.
“Do not go see things at your price point,” Gartenberg said. “Because where the market is today, is going above your price point.”
(PHOTO: Getty Images)
But be prepared for bidding wars when buying for a home, Gartenberg warned. She put a newly renovated apartment in Hudson Heights on the market, which is selling “well above ask,” she said, so much that “it made me scared.” The sale on the apartment is not closed yet so she said she was not able to discuss how far above asking the bidder went.
Gartenberg priced her Two Bridges apartments at $3,550 for a two-bedroom unit on the top floor, and at $3,050 for a one-bedroom unit.
On Saturday, her open houses were full. Everything went above the ask. “We had so much interest, we were able to divert offers to a not-yet-listed apartment and rent that, too,” Gartenberg said in a follow-up email.
Half of the offers that came in were from people who had seen the apartment via FaceTime, or from a video she had sent them.
Gartenberg offered rental tips for the summer.
Get your paperwork in order, such as your proof of income, photo ID, 1040 tax form, bank statements, and other financial documents. Also, get your job to write a letter to say you’re in good standing, Gartenberg said.
Given the number of rentals going for above asking, be prepared to look below your price point, she added. If you know which building you want to live in, get in touch with the landlord’s agent, she said, and find out what’s coming to market.
Hunting for a rental in New York and want to share your thoughts? Write to: aarthi@marketwatch.com
New Orleans homeowner Lisa Tourtelot says homes were flying off the market in her neighborhood as recently as a month ago. Now, as she prepares to list her own house for sale, the homeowner is on edge.
Mortgage rates, property taxes, and homeowners insurance are all on the rise, she says—developments the 36-year-old fears are shutting out buyers. “My realtor told me that, as of last week, about 50% of interested buyers dropped out,” she says. On real estate sites like
Zillow
,
Tourtelot notes, homes in her area are spending more time on the market and sellers are dropping their asking prices.
Across the country, agents report working with people like Tourtelot who are increasingly unnerved by the prospect of selling a home. Mortgage rates have increased at a historic pace this year, making a home purchase even more expensive. Buyers are already pinched by high prices.
The increase in borrowing costs has reduced buyers’ purchasing power in a matter of months. The rate on a 30-year mortgage earlier this month increased to nearly 6% from about 3% at the end of last year. At 6%, a buyer on a $2,500 monthly budget could afford an approximately $400,000 home—down from $517,500 at the end of 2021, according to
Redfin
.
That has caused some buyers to call off their search. In recent weeks, the volume of applications for a loan to purchase a home, as measured by the rolling 4-week average, fell to its lowest levels since the pandemic’s early days, according to Mortgage Bankers Association data. And existing-home sales have fallen, too, declining in May to their lowest level since June 2020, according to the National Association of Realtors.
Buyers have more choices now, too. The number of active and new listings has increased on a year-over-year basis recently, according to Realtor.com’s gauge. (Barron’s and the company that operates Realtor.com are both owned by
News Corp
.
)
These shifts aren’t sitting well with sellers seeking top-dollar for their homes. And the cool-down has led some sellers to slash listing prices. While listing prices nationally are still well above year-ago levels, according to Realtor.com data, a record share of home listings saw a price cut last week, according to brokerage Redfin.
“There are a lot of sellers who are panicky,” says Deviree Vallejo, a Denver-based agent with LIV Sotheby’s Realty. “They feel like they missed the height of the market.”
In Denver, homes are still quickly going under contract, Vallejo says—but bidding wars are less competitive. “Oftentimes, you get one good offer, and you take it,” she says.
Dallas homeowners, meanwhile, are disappointed by the cooler market, says Todd Luong, an agent with Re/Max DFW Associates based in Frisco, Texas. “Before, you could probably have a plain-looking home and overprice it a little bit, and it would still sell very quickly,” Luong says. “That is not the case anymore.”
In Boise, one of the hottest housing markets last year, sellers are concerned they won’t get as much for their house as they originally planned, says Redfin agent Shauna Pendleton. Last week, listing prices for homes in Boise grew at their slowest year-over-year pace since 2020, according to Realtor.com. “Pretty much any agent you talk to in the Boise metro area doesn’t see a crash happening—but I do think that we are going to see a dip in prices,” says Pendleton.
Amy Vastardis, an agent with Coldwell Banker Realty, says homes in Orlando aren’t being bid up like they were. She is telling her clients to not expect “the crazy numbers that we’ve been seeing.”
In other places, a housing crisis is on people’s minds. Mark Kossel, 34, sees the market from two different perspectives. The owner of Detroit’s Midtown Home Mortgage, Kossel is also selling his two-bedroom condo in the city.
Kossel says he hears from clients concerned about a bubble burst. “They have that worry that there is going to be some kind of rug pulled out from under the housing market,” Kossel says, adding that he isn’t flustered by the current situation. “If there is any bubble that is going to burst, I really don’t see it being in the housing market,” he says.
Tourtelot, the New Orleans homeowner, said she remembers the 2008 housing crash, even though she wasn’t a homeowner then. “I don’t want to be that person stuck with a house that costs way more than it’s actually worth,” she says.
Tourtelot chose to list her home at a lower price in hope of a quick sale, opting for $235,000 instead of $250,000. “If I can sell it quickly and if we can break even, I’m going to consider it a win,” Tourtelot says.
Go ahead and list your home, John McCafferty, a director of financial planning at Edelman Financial Engines in Washington, D.C., says, noting that the decision to buy or sell a home should be based on personal circumstances, not macroeconomic factors. “There is always going to be buyers out there,” McCafferty says. “It’s just a matter of appropriately pricing and marketing your property to attract the right kind of buyer.”
That is the approach that Detroit-area homeowner Vicki Welsh is taking. The 60-year-old recent retiree is listing her four-bedroom home overlooking Lake St. Clair for $810,000 as she prepares to downsize and move to Florida.
Welsh says she is “not too happy” about rising mortgage rates, but it’s simply the right time for her to move. “I’m confident that I have a beautiful home, and it will just take the right buyer to realize that and appreciate it,” Welsh says.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
There has been a lot of chatter recently about the possibility of a recession.
Yet what exactly does that mean — and what would a potential downturn look like?
A recession is defined as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months,” according to the National Bureau of Economic Research.
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It’s also ultimately inevitable during the course of the normal economic cycle, said Mark Hamrick, senior economic analyst at Bankrate.
“It should not be shocking that they occur,” he said. “It is usually the timing, the cause and the depth and duration of them that catch people by surprise.”
The risk of a recession
Economists are watching the economy closely and many are boosting their odds of a recession occurring in the near term. Citigroup, assessing global economic growth over the next 18 months, sees a 50% probability of a global recession happening, while Goldman Sachs has put the odds of a recession for the U.S. in the next year at 30%.
However, not everyone is convinced a recession will happen.
UBS, for example, has a base case forecast of “no recession.” Mark Zandi, chief economist at Moody’s Analytics, also thinks as things stand now, a recession is unlikely.
“The economy is slowing and it will be uncomfortable over the next 12 to 24 months, but I think we will make our way through it without a recession,” he said.
Of course, something could happen to change that projection.
“We are very vulnerable to anything else that could go wrong because things are so fragile,” Zandi explained.
‘The economy comes to a standstill’
Still, Zandi’s current prediction still means some economic pain ahead. “The economy comes to a standstill, meaning months where we are getting little job growth or negative job growth,” he said.
Unemployment would start to notch higher, perhaps hitting 4% or 4.5% and inflation, while moderating, will still be high, he said.
He doesn’t see stock prices going anywhere and housing values remaining, at best, flat or even declining in some markets.
“For the average American, it is not just going to feel great,” he said.
What happens during different types of recessions
Jim Young | Bloomberg | Getty Images
The duration and depth of recessions are characterized by shapes.
For instance, a V-shaped recovery is quick, with a sharp decline to a bottom followed by a dramatic rise. In a U-shaped recovery, on the other hand, the economy spends longer at the bottom and then gradually rebounds.
A W-recovery is when the economy passes through a recession and into recovery and then immediately enters another recession, and K-shaped means some parts of the economy recover more quickly than others.
What a ‘typical’ recession looks like
A post-World War II typical recession lasts about six to 12 months, although some were longer and one was shorter, Zandi said.
The most recent recession occurred in 2020 and was brief — only two months long. The longest recession occurring after 1948, the Great Recession, spanned 18 months, beginning December 2007 and ending June 2009.
In a garden variety recession, the economy typically loses 3 million to 4 million jobs, and unemployment can get as high as 6%, Zandi said. The stock market may fall another 5% to 10% and national house prices decline about 5% to 10%, he said.
That doesn’t necessarily mean that’s what will occur if the economy does fall into recession. Right now, the fundamentals of the economy are good, Zandi said.
“There is a good chance [if] we do suffer a recession, [that] it will be less severe than a typical one,” he predicted.
‘Prepare for the possibility’ of a recession
Whether a recession happens or not, you should be ready just in case.
“I counsel people to prepare for the possibility, to pay down debt, to save money, to consider deferring large purchases,” said Hamrick.
He anticipates that Bankrate’s Second-Quarter Economic Indicator survey will put chances of a recession in the next 12-18 months higher than the 1-in-3 odds in the first-quarter survey.
Still, that doesn’t mean the worst-case scenario.
“If there is a downturn here, I think that there is a possibility that it could be relatively short and shallow,” Hamrick said. “It need not be ruinous.”
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WEEK OF JUNE 12, 2022
TERRAIN ON THE PARKWAY: 1625 Lehigh Parkway East, Allentown
Pet lovers rejoice. Among the features offered at this new apartment complex along the Little Lehigh Creek are pet wash and grooming stations for your furry friends. Perfect for getting them cleaned up after adventures on the nearby Lehigh Parkway Trails.
This “sanctuary amid the city of Allentown” offers 160 new 1-, 2- and 3-bedroom apartments. Other amenities include a club room, fitness center, conference rooms and package lockers. Monthly rent starts at $1,575 with three-bedroom, two-bath units starting at $2,540.
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DLP CAPITAL: 835 W. Hamilton St., Allentown
The former site of the flagship Hess’s department store will soon be home to another company with local roots. Lehigh Valley native Don Wenner is moving his real estate investment and finance firm DLP Capital from Bethlehem to Allentown.
To celebrate, a grand opening will be held on June 22. The event will start at 4 p.m., with live music and food trucks. Registration is required through DLP or the Greater Lehigh Valley Chamber of Commerce. DLP acquired the Grand Plaza Building, formerly PPL Plaza, via auction last year for $15.3 million.
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WELLS FARGO: 740 Hamilton St., Allentown
While Wells Fargo has been the leader in closing banks lately, it will hold a ribbon-cutting for its new downtown Allentown office on June 30. The event starts at 11 a.m., with registration free and available through the Greater Lehigh Valley Chamber of Commerce website. Wells Fargo is the fourth-largest bank in the U.S. based on assets, and has about 8,000 branches.
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C&I MINERALS: South Mall, 3300 Lehigh St., Allentown
If you’re in the market for sterling silver jewelry, minerals and semi-precious gemstones, this is the store for you, now operating at the South Mall in Allentown. The South Mall is open Monday through Saturday from 11 a.m. to 8 p.m. and noon to 5 p.m. on Sunday.
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PPL CORP.: 2 N. Ninth St., Allentown
The Allentown-based utility company has a new approach after making two big transactions. It sold its U.K. operations, taking a lot of risk and currency complications out of its business, and bought a major Rhode Island utility.
During an investor conference Thursday, Chief Executive Officer Vincent Sorgi said the new, focused PPL is prepared to take the strategy that made it successful in Pennsylvania to its Kentucky and Rhode Island operations. Read more.
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MARTELLUCCI’S PIZZERIA: 1419 Easton Ave., Bethlehem
Ownership at this Bethlehem restaurant has changed, but the nearly half-century tradition there continues. Paul and Donna Hlavinka and their family are running the pizza place just as it has been operated for 49 years. The pizza dough and sauce recipes remain, the menu still includes a variety of sandwiches, salads and pasta, and the family feel of Martellucci’s, founded in 1973, continues. Get the full story.
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KASPRENSKI FAMILY EYE CARE: 1088 Howertown Road, Catasauqua
Dr. Jacob Kasprenski’s father and grandfather were both physicians in the Lehigh Valley, and now he’s following in their footsteps of serving the community. His new vision-care center held a grand opening in conjunction with the Whitehall Area Chamber of Commerce. Kasprenski Family Eye Care provides vision-care products and optometry services for emergency, medical and comprehensive routine eye care.
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JOSIE’S NEW YORK DELI: 14 Centre Square, Easton
This longtime downtown Easton lunch spot closed early in the COVID-19 pandemic, but it could be making a comeback. A plan to split the space with a vegan deli did not work out, but a June 13 Historic District Commission meeting includes a request for a new sign at Josie’s. The downtown lunch and carry-out spot was a fixture for decades before shutting down indefinitely.
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ZEKRAFT – CURATORS OF TASTE: Easton Silk Mill, 1247 Simon Blvd., Unit N107, Easton
For owners Zeke and Elaine Zelker, their mission is “not simply about feeding or entertaining people; it’s about nourishing them — body, mind and spirit.” And now people in Easton will be closer to their community-minded, locally-sourced meals as their new location off 13th Street will have a grand opening on June 15, with a ribbon-cutting at 3:30 p.m.
The first Zekraft cafe was opened in Bethlehem. The restaurants’ menus change frequently, with a focus on local ingredients. Selections include organic coffee and tea, tartines (toast with toppings such as smoked turkey and brie), stir fry, short ribs, soups. The Easton Zekraft is closed on Mondays, open 8 a.m. to 4 p.m. Tuesday through Friday, and 9 a.m. to 3 p.m. Saturday and Sunday. Read more.
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MANTRA MASSAGE: 319 Main St., Emmaus
The goals at women-owned Mantra are physical and spiritual healing, and they use a holistic approach to massage therapy to help meet each individual’s unique needs. Services offered include facial cupping, and massages including targeted warm Himalayan salt stone and targeted facial massage. Sessions can be customized to suit each client’s activities, stress level and occupation.
The new massage and wellness spa will hold its grand opening on July 10 starting at 11 a.m. The establishment is holding the event with the Emmaus Main Street Partners and the Greater Lehigh Valley and East Penn chambers of commerce. Posted hours are 10 a.m. to 8 p.m., Tuesday through Saturday, and Mantra is closed on Sunday and Monday.
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THE CLUB AT TWIN LAKES: 3625 Shankweiler Road, North Whitehall Township
The former Iron Lakes Country Club, constructed in the late 1950s and early 1960s, held a grand opening this week under its new name, The Club at Twin Lakes. The Jaindl family purchased the golf course last year, and worked with KemperSports Management to upgrade it. Renovations include improvements on the course, cart paths and a new pro shop. See the ribbon-cutting.
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PROLOGIS INC.: Proposed warehouses at 7201 Hamilton Blvd., Upper Macungie Township
Prologis, a titan in the logistics industry, is the choice of Air Products and Chemicals to own and operate three warehouses proposed in Upper Macungie Township. The industrial gas company said Prologis will use some of the former Air Products headquarters campus for the warehouses, totaling about 2.6 million square feet. The land became available when Air Products moved its headquarters about a mile down the road last year. Get the full details.
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LEHIGH VALLEY HOSPITAL-CARBON: 2128 Blakeslee Blvd. Drive East (Route 443), Mahoning Township
Lehigh Valley Health Network on Monday ceremonially opened its first Carbon County hospital — a $78 million, 100,578-square-foot facility that officials billed as a “full-service community hospital.” With final approval from the state Health Department, the new hospital opened to patients on Wednesday.
The facility, just outside Lehighton, already is being eyed for expansion — with room to double its current space for 20 in-patient beds, and to greatly expand its emergency room, officials said. Read about it.
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SWIFTWATER SOLAR: Proposed solar field in Pocono Township
Pocono Township commissioners voted Monday to approve a plan to build Pennsylvania’s largest solar field on a mountain slope, despite pleas by some residents to reject the project for environmental concerns. Commissioners voted 4-1 to accept Swiftwater Solar’s preliminary final plan for the $111 million, 80-megawatt field on a private 644-acre site on top of Bear Mountain that would include about 200,000 solar panels.
The property is east of Interstate 380, adjacent to Sullivan Trail and Back Mountain Road in what now is zoned as a recreational district. With approval still needed from the state Department of Environmental Protection and the state Transportation Department, construction is expected to start later this year. Get the full story.
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FIRETREE LTD.: Proposed in-patient drug- and alcohol-addiction treatment center at 440 N Claude A Lord Blvd. (Route 61), Pottsville
A company that in May withdrew a proposal to locate a drug- and alcohol-addiction treatment center in a Schuylkill County industrial park now is seeking approval for a new site.
Firetree Ltd., which is based in Williamsport and operates treatment centers for people with drug and alcohol addiction and other clients transitioning out of prison, now wants to expand its in-patient rehab operation at the former Sands Ford auto dealership at 440 N Claude A Lord Blvd. (Route 61), Pottsville.
To do that, it needs the Pottsville Zoning Hearing Board’s approval regarding the use of the land, which is zoned community commercial. It has a hearing before the board scheduled for 6:30 p.m. June 16 in City Hall.
In April, Firetree proposed building a one story, 25,000-square-foot treatment center on a vacant 11.5-acre site at 10 Shultz Drive in MAJIC Industrial Park in Delano Township. However, two days before a May 4 hearing was to be held before the Schuylkill County Zoning Hearing Board, Firetree withdrew the application. Get the full story.
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DUNKIN’: 400 Terry Rich Blvd., St. Clair
A Dunkin’ in Schuylkill County has become just the fourth location of the donut and coffee chain to go entirely digital. The remodeled store at 400 Terry Rich Blvd., St. Clair, opened with a ribbon-cutting Monday. It has replaced its traditional order counter with two in-store kiosks at which customers place digital orders and pay using a credit card or Dunkin’ gift card.
Guests will also be able to place advance orders using the mobile order feature on the Dunkin’ App. The location still offers Dunkin’s full menu. There only other all-digital Dunkin’ locations in the United States are in Boston, Cherry Hill, N.J. and Dallas, Luzerne County. Read more.
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THE CONSERVATORY: 4059 Skyron Drive, Doylestown
A nonprofit music school in Bucks County will close after 34 years, and school officials say the COVID-19 pandemic is the cause. The Conservatory, near the Doylestown Airport, has provided education in music, performances and therapy for communities in Bucks, Montgomery and Philadelphia counties since 1988. Its final day open will be June 30.
The pandemic led to a decline in enrollment and revenue, and according to a statement from the school, attempts to merge with other music schools were not successful. The Conservatory started as the Community Conservatory of Music in the President’s House on the grounds of Delaware Valley College and operated in three other locations before settling at Skyron Drive in 2013. The school has 22 studios and a performance hall. Get the full scoop.
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POPEYES LOUISIANA KITCHEN and ARBY’S: 680 Memorial Parkway, Phillipsburg
Demolition began last week at the former Ahart’s Market on Route 22 in Phillipsburg. The site will not be vacant for long, Mayor Todd Tersigni said. A Popeyes Louisiana Kitchen and Arby’s will be built on the site.
Popeyes is a fried-chicken fast-food chain with about 2,800 U.S. locations, plus another 600 more in territories and other countries. Arby’s, a sandwich chain, has 3,300 locations. Popeyes and Arby’s are both owned by Inspire Brands Inc., which also owns Buffalo Wild Wings, Dunkin, Sonic Drive-In and other restaurant chains. Check out the demolition.
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UNITY BANK CENTER FOR BUSINESS & ENTREPRENEURSHIP: 119 Main St., Flemington
A historic building in Flemington, which has been a home and later was used as offices, will hold Hunterdon County Chamber of Commerce offices and the Unity Bank center. The chamber will hold a ribbon-cutting at the building at 5:30 p.m. June 15. To attend the event, register through the chamber website. The building was erected in 1847 and was once the home of George Hall Large, who served as president of the New Jersey state Senate.
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PREVIOUS OPENINGS AND CLOSINGS
· Honeygrow opens Quakertown location, next to Chipotle on Route 309, on June 3.
· Dunkin’ reopens remodeled restaurant at 1174 MacArthur Road in Whitehall Township
· Muse Modern Med Spa at 325 Fifth St. in Whitehall Township will hold a grand opening June 4.
· Around Again, a consignment store, opened at 154 S. Main St., Phillipsburg
· Steak and Steel Hibachi, a restaurant in the works at 44 W. Walnut St., Bethlehem, still plans on opening late this summer.
· Take It Outdoors Recreation Hub has moved to a spot along the Schuylkill River Trail at Riverfront Park in Pottstown, Montgomery County
· Pedego Electric Bikes has a new outlet in Lambertville, N.J. at 13 N. Union St.
· Amanda Vachris has opened a new Keller Williams Real Estate office at 15 St. John St. in Schuylkill Haven.
· Easton’s new West Ward Market will open Wednesday and be open on Wednesday’s through the summer from 3 p.m. to 7 p.m. The market, created by the Greater Easton Development Partnership, will sell fresh produce on 12th Street, next to Paxinosa Elementary School.
· Ciao Sandwich Shoppe is adding a second location, this time on College Hill in Easton. Ciao plans to open at 325 Cattell St. in late summer. Ciao already operates in downtown Easton at 12 N. Third St
· Ma’s Crepes and Cakes will hold a grand opening and ribbon-cutting June 16 at 46 W. Broadway, Jim Thorpe. The celebration starts at 5 p.m., with the ribbon cutting at 5:45 p.m.
· Bethlehem’s Back Door Bakeshop will reopen as a wholesale operation at 7 E. Church St. in the city’s historic district. The business was open for nine years as a retail outlet at Broad and Center streets, before announcing in March that it would close the storefront April 3 and “go back to its origins as a wholesale business.”
·The Beef Baron on Catasauqua Road in Bethlehem is closed indefinitely for renovations
· The Brothers That Just Do Gutters are opening a new location in Allentown at 1302 N. 18th St.
· St. John Chrysostom Academy, an Orthodox school serving grades 1-9 starting this fall, held a grand opening at its St. Francis Center, Bethlehem, campus.
· Easton Commons, a shopping center anchored by Giant Foods at 2920 Easton Ave., Bethlehem Township, has a new name: The Shops at Bethlehem.
· Carbon County is getting a taste of Brazil at Uai Brasil BBQ at 315 Lehigh Ave. in Palmerton.
· The Keystone Pub in Bethlehem Township, at 3259 Easton Avenue, has reopened after a lengthy and expensive renovation.
· The Trading Post Depot opened at 401 Northampton St., Easton. The rustic furniture store makes custom tables for dining rooms, desktops, conference centers and more.
· The Easton area has a new gym: Homemade Fitness at 444 Cedarville Road in Williams Township.
· Il Gaetano Ristorante opened at its 665 Columbus Ave., Phillipsburg, location.
· Ciao! Sandwich Shoppe to open second location on College Hill in Easton, replacing The Kettle Room
· Rene and Grisellies Benique have opened Ezekiel 47 Cafe at 10 S. Fifth Ave., off Fifth and Penn avenues, in West Reading.
· Alter Ego Salon and Day Spa in Emmaus is holding a grand opening Sunday, May 22, from 11 a.m. to 3 p.m., with a ribbon cutting at noon.
· Origen Latin Fusion has opened at the site of the former Tomcat Cafe in Sinking Spring, Berks County.
· Sellersville Senior Residences will hold a ribbon-cutting ceremony May 24. The Bucks County affordable-housing community for adults 55 and older has 50 apartments, with eight allocated for people with behavioral health needs.
· The House and Barn in Emmaus has opened its Shed outdoor dining and cigar bar area. The House and Barn is at 1449 Chestnut St. in Emmaus.
· Realtor Amanda Vachris and the Schuylkill Chamber of Commerce will hold a ribbon cutting at Vachris’s new Keller Williams Real Estate office at 15 St. John St., Schuylkill Haven, at 4 p.m. on May 24.
· Il Gaetano Ristorante will hold a grand opening on Friday, May 20, at 5:30 p.m. The 665 Columbus Ave., Phillipsburg.
· First Commonwealth Federal Credit Union will hold a grand opening at its new headquarters in Trexlertown, 6126 Hamilton Blvd., on May 18.
· Vinyl Press Signs & Graphics has relocated within Emmaus. The new site is 15 S. Second St., not far from the former Sixth Street location.
· Pedro’s Cafe in Emmaus to close
· SV Sports (formerly Schuylkill Valley Sports) to close Quakertown location
· Flemington DIY will host a Grand Re-Opening on May 14 at 26 Stangl Road, Flemington. The celebration will kick off at 10 a.m.
· Elpedio’s Ristorante at Seipsville opened at 2912 Old Nazareth Road in Easton. The restaurant is open Wednesday through Sunday.
· Uai Brazil opened at 315 Lehigh Ave, Palmerton, offering both a seated or buffet option.
· Colombian Mex Restaurant opened at 107 E Union Blvd in Bethlehem, offering traditional Colombian cuisine.
· Precision Ink opened at 161 W Berwick St. in Easton.
· King Wing opened a location in Bethlehem at 129 E. Third St., serving wings and sandwiches.
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My summer portfolio strategy is to play the old disco hit “Baby Come Back” while slow dancing with my December brokerage statements. If it works, I have a business idea involving Hall, Oates, and a two-and-20 fee structure.
At least there’s real estate. Home equity is said to be hitting record highs. Then again, taking comfort there would be like slipping on a financial toupee—everyone knows that underlying conditions have deteriorated.
The latest reading on nationwide pricing comes from back in March. Since then, 30-year mortgage rates have shot up to nearly 6%, and applications from buyers have slowed. This past week, a pair of online brokers with a good read on house searches,
Redfin
(ticker: RDFN) and
Compass
(COMP), announced layoffs.
Meanwhile, Redfin shares are down some 90% from their peak. Builders have gotten clobbered, too. Friends don’t let friends own leveraged exchange-traded funds with names like
Direxion Daily Homebuilders & Supplies Bull 3X Shares
(NAIL), especially when interest rates are rising, but if you’re curious, that one just lost 45% over five trading days.
Should investors buy shares of home builders here? Brokers? What’s next for house prices? And when will the stock market come back? Let me answer those in order of declining near-term confidence, starting at iffy.
Yes, buy builders. Prefer
Lennar
(LEN) and
Toll Brothers
(TOL), says Jade Rahmani, who covers the group for KBW. He points out that builder shares trade at 60% of projected book value, which is where they tend to bottom during recessions, ignoring the 2008 financial crisis. Lennar will benefit from the pending sale of a real estate technology unit, and Toll focuses on affluent buyers, around 30% of whom pay cash, and so aren’t put off by high mortgage rates.
Price/earnings ratios across the group are astonishingly low, but ignore them. They stem from two conditions that won’t repeat soon: land values jumping 30% or more from the time companies bought acres to when they sold houses, and a sharply higher pace of transactions during the pandemic. A builder that trades at four times earnings might really go for eight times assuming normalized conditions—still cheap, but a big difference.
House prices jumped more than 20% in March from a year earlier, but Rahmani expects that rate to plunge to 2% by the end of the year. His baseline view is that next year brings flat prices. His recession scenario, based on a study of past sales volumes, has prices falling 5% next year—perhaps more if mortgage rates rise to 7%. That might not sound like much, but for recent buyers with typical mortgages, a 5% price drop can reduce equity by 25%.
Most homeowners don’t have mortgage rates anywhere near recent ones; some two-thirds are locked in below 4%. These buyers are unlikely to move and take new loans if they don’t have to, which is one reason that supply could stay low for years. Another is that mortgages are much higher quality than they were during the last housing bubble, so there’s unlikely to be a wave of defaults and panic selling.
But something has to give on affordability. Typical payments on new mortgages have topped 23% of disposable income, close to their 26% high during the last bubble. But incomes are growing by 6% a year, so a long pause for house prices could help restore affordability. Anyhow, the pandemic has left people spending more time in their homes, so they should be willing to pay somewhat more on housing as a percentage of their income, reckons Rahmani.
Don’t rush to buy shares of the brokers, says William Blair analyst Stephen Sheldon. He has Market Perform ratings on three of them: Redfin,
RE/MAX Holdings
(RMAX), and
eXp World Holdings
(EXPI). In a blog post this past week, Redfin CEO Glenn Kelman wrote that May demand was 17% below expectations, and that the company will lay off 8% of employees. Redfin hires agents directly, whereas many brokers use independent contractors.
Kelman wrote that the sales slump could last years rather than months. More agents could leave on their own. National Association of Realtors membership, a proxy for the number of people selling houses, hit 1.6 million last year, up from about a million in 2012.
Sheldon at William Blair says he’s struck by how far broker valuations have come down, but sentiment is sour, and he’s waiting for signs of stabilization. Redfin goes for less than a tenth of its peak stock market value early last year, even though revenue has roughly doubled. That puts shares at around one-third of revenue. Free cash flow was expected to turn consistently positive starting in 2024. Now, we’ll see.
As for the stock market, I have good news and bad news, neither of which is reliable. The S&P 500 this past week dipped below 15 times projected earnings for next year, which suggests pricing has returned to historical averages. But there’s nothing to say that the market won’t overshoot its average valuation on its way to becoming cheap. And
Goldman Sachs
says forecasts for 10% earnings growth this year and next look too high.
Expect slower growth, says Goldman, and if there’s a recession, earnings could fall next year to below last year’s level. The bank’s estimates under that scenario leave the S&P 500 today trading at more than 18 times next year’s earnings. Goldman predicts that the index will rise 17% from Thursday’s level by year’s end without a recession, or fall 14% with one. Please accept my congratulations or condolences.
Not to worry, says Credit Suisse. Statistically, individual forecasts for company earnings are tightly clustered. That’s the opposite of what tends to happen before earnings tank.
I’ve heard people refer to the stock market as a “total cluster” before, but I had no idea they were talking about estimate dispersion.
Write to Jack Hough at jack.hough@barrons.com. Follow him on Twitter and subscribe to his Barron’s Streetwise podcast.
My summer portfolio strategy is to play the old disco hit “Baby Come Back” while slow dancing with my December brokerage statements. If it works, I have a business idea involving Hall, Oates, and a two-and-20 fee structure.
At least there’s real estate. Home equity is said to be hitting record highs. Then again, taking comfort there would be like slipping on a financial toupee—everyone knows that underlying conditions have deteriorated.
The latest reading on nationwide pricing comes from back in March. Since then, 30-year mortgage rates have shot up to nearly 6%, and applications from buyers have slowed. This past week, a pair of online brokers with a good read on house searches,
Redfin
(ticker: RDFN) and
Compass
(COMP), announced layoffs.
Meanwhile, Redfin shares are down some 90% from their peak. Builders have gotten clobbered, too. Friends don’t let friends own leveraged exchange-traded funds with names like
Direxion Daily Homebuilders & Supplies Bull 3X Shares
(NAIL), especially when interest rates are rising, but if you’re curious, that one just lost 45% over five trading days.
Should investors buy shares of home builders here? Brokers? What’s next for house prices? And when will the stock market come back? Let me answer those in order of declining near-term confidence, starting at iffy.
Yes, buy builders. Prefer
Lennar
(LEN) and
Toll Brothers
(TOL), says Jade Rahmani, who covers the group for KBW. He points out that builder shares trade at 60% of projected book value, which is where they tend to bottom during recessions, ignoring the 2008 financial crisis. Lennar will benefit from the pending sale of a real estate technology unit, and Toll focuses on affluent buyers, around 30% of whom pay cash, and so aren’t put off by high mortgage rates.
Price/earnings ratios across the group are astonishingly low, but ignore them. They stem from two conditions that won’t repeat soon: land values jumping 30% or more from the time companies bought acres to when they sold houses, and a sharply higher pace of transactions during the pandemic. A builder that trades at four times earnings might really go for eight times assuming normalized conditions—still cheap, but a big difference.
House prices jumped more than 20% in March from a year earlier, but Rahmani expects that rate to plunge to 2% by the end of the year. His baseline view is that next year brings flat prices. His recession scenario, based on a study of past sales volumes, has prices falling 5% next year—perhaps more if mortgage rates rise to 7%. That might not sound like much, but for recent buyers with typical mortgages, a 5% price drop can reduce equity by 25%.
Most homeowners don’t have mortgage rates anywhere near recent ones; some two-thirds are locked in below 4%. These buyers are unlikely to move and take new loans if they don’t have to, which is one reason that supply could stay low for years. Another is that mortgages are much higher quality than they were during the last housing bubble, so there’s unlikely to be a wave of defaults and panic selling.
But something has to give on affordability. Typical payments on new mortgages have topped 23% of disposable income, close to their 26% high during the last bubble. But incomes are growing by 6% a year, so a long pause for house prices could help restore affordability. Anyhow, the pandemic has left people spending more time in their homes, so they should be willing to pay somewhat more on housing as a percentage of their income, reckons Rahmani.
Don’t rush to buy shares of the brokers, says William Blair analyst Stephen Sheldon. He has Market Perform ratings on three of them: Redfin,
RE/MAX Holdings
(RMAX), and
eXp World Holdings
(EXPI). In a blog post this past week, Redfin CEO Glenn Kelman wrote that May demand was 17% below expectations, and that the company will lay off 8% of employees. Redfin hires agents directly, whereas many brokers use independent contractors.
Kelman wrote that the sales slump could last years rather than months. More agents could leave on their own. National Association of Realtors membership, a proxy for the number of people selling houses, hit 1.6 million last year, up from about a million in 2012.
Sheldon at William Blair says he’s struck by how far broker valuations have come down, but sentiment is sour, and he’s waiting for signs of stabilization. Redfin goes for less than a tenth of its peak stock market value early last year, even though revenue has roughly doubled. That puts shares at around one-third of revenue. Free cash flow was expected to turn consistently positive starting in 2024. Now, we’ll see.
As for the stock market, I have good news and bad news, neither of which is reliable. The S&P 500 this past week dipped below 15 times projected earnings for next year, which suggests pricing has returned to historical averages. But there’s nothing to say that the market won’t overshoot its average valuation on its way to becoming cheap. And
Goldman Sachs
says forecasts for 10% earnings growth this year and next look too high.
Expect slower growth, says Goldman, and if there’s a recession, earnings could fall next year to below last year’s level. The bank’s estimates under that scenario leave the S&P 500 today trading at more than 18 times next year’s earnings. Goldman predicts that the index will rise 17% from Thursday’s level by year’s end without a recession, or fall 14% with one. Please accept my congratulations or condolences.
Not to worry, says Credit Suisse. Statistically, individual forecasts for company earnings are tightly clustered. That’s the opposite of what tends to happen before earnings tank.
I’ve heard people refer to the stock market as a “total cluster” before, but I had no idea they were talking about estimate dispersion.
Write to Jack Hough at jack.hough@barrons.com. Follow him on Twitter and subscribe to his Barron’s Streetwise podcast.
The housing market may be slowing down, but owning a home is still a costly proposition. Two charts reveal exactly how expensive it is.
Just over a year ago, the monthly cost of owning and renting were practically identical, according to a blog post from John Burns Real Estate Consulting. “Now, owning a home costs $839 more per month than renting. This differential is almost $200 higher than at any time since the turn of the century,” Danielle Nguyen, senior research manager at John Burns wrote.
Across residential properties, renting a home would set one back roughly $1,962 a month, according to data from Redfin, as of April 2022. But if a homeowner had put down a 7% down payment for a home, they’d be stuck with a mortgage that would set them back $2,114 a month — $152 more.
“With demand now shifting toward renting, home builders who were once reluctant to sell to rental home investors are now soliciting offers from investors,” Nguyen added. “Strong demand from investors will provide additional support to today’s home prices.”
The historical gap between owning and renting can be seen in the chart below:
Looking ahead, however, Nguyen told MarketWatch, “High home prices and rising interest rates may impact home buyers.” Fewer people can now qualify for homes, she said. Indeed, first-time buyers are increasingly priced out of the country’s hottest real-estate markets.
This homebuyer penalty hits harder in some spots in the country, according to John Burns. In places where home prices accelerated the most, like Raleigh-Durham, Nashville, Denver, Tampa, and Phoenix, owning a home was much more expensive than renting.
John Burns Consulting assumed the purchase of a home at 80% of the current median price. They also assume that the buyer put down a 5% down payment with a 30-year fixed-rate mortgage.
To put that in context: A year ago, renting would have set you back $1,705 a month, as compared to a monthly mortgage payment of $1,451, the National Association of Realtors stated in a blog post in January.
The cost to own a home went up because home prices have been soaring since the start of the COVID-19 pandemic, as people moved out of crowded cities helped by their ability to work remotely. Rising building costs and the shortage of inventory also helped to push up prices.
The typical value of a home as of May 31 was nearly $350,000, according to Zillow
Z,
In January 2020, right before the pandemic began to spread across the country, the typical home was valued at $251,000.
In March 2022, the median home constitutes about 38.6% of someone who is earning the median income of $68,000 a year, up from 30.2% in March 2021, according to the Atlanta Federal Reserve.
The Dow Jones Industrial Average
DJIA,
tech-heavy Nasdaq Composite
COMP,
and S&P 500
SPX,
closed lower on Thursday after rising on Wednesday on the back of the U.S. Federal Reserve’s 75-basis-point rate hike. Stocks were clinging to positive territory in pre-trading Friday.
Got thoughts on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at aarthi@marketwatch.com.
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