February 5, 2016
Friday’s Government Reports Roundup
- The D.C. Fiscal Policy Institute released a report finding that more than half of D.C.’s public housing needs major renovation, estimating costs for upgrades and replacements at about $1.3 billion.
- The Commerce Department released a report at the end of January finding that the U.S. economy grew at a 0.7 percent annual rate in the fourth quarter of 2015 bringing the total economic growth in 2015 to 2.4%.
February 5, 2016 | Permalink | No Comments
February 4, 2016
Tale of Two Airbnbs
CBRE has issued a report, The Sharing Economy Checks In: An Analysis of Airbnb in the United States. It opens,
The sharing economy has become a prominent though not well understood economic phenomenon over the past several years. Airbnb is the market leader as it relates to the temporary accommodations industry. CBRE Hotels’ Americas Research compiled select information from STR, Inc. and Airdna, a company that provides data on Airbnb, for hundreds of U.S. markets to assess the relevancy of this sharing platform to the traditional hotel industry.
Airbnb’s presence in key markets throughout the U.S. is growing at a rapid pace, with users spending $2.4 billion on lodging in the U.S. over the past year, according to analysis from CBRE Hotels. Over the study period of October 2014 – September 2015, more than 55 percent of the $2.4 billion generated was captured in only five U.S. cities (New York, Los Angeles, San Francisco, Miami and Boston), represents a significant portion of the lodging revenues in these markets.
CBRE Hotels compiled select information for hundreds of U.S. markets to assess the relevancy of this sharing platform to the traditional hotel industry. From this data, the firm has developed an Airbnb Competition Index. This measure incorporates a comparison of Airbnb’s Average Daily Room rates (ADR) to traditional hotel ADR’s; the scale of the active Airbnb inventory in a market to the supply of traditional hotels, and the overall growth of active Airbnb supply in that market, into a measure of potential risk. New York was identified as the number one domestic market at risk from the growth of Airbnb, with an Airbnb Risk Index of 81.4, followed by San Francisco, Miami, Oakland and Oahu. (1)
What I find interesting about this is that Airbnb’s footprint is so hyperlocal. On a national level, just a handful of markets account for a majority of its revenues. But then, if you look at one of those individual markets, New York, just a handful of neighborhoods account for a majority of the revenue coming from that market. I cannot yet imagine what the hospitality sector will look like once the sharing economy fully saturates it, but it will surely be different that what it is today.
February 4, 2016 | Permalink | No Comments
Thursday’s Advocacy & Think Tank Roundup
- According to data from the federal Early Childhood Longitudinal Survey, educators must tailor support for the disadvantaged children in new environments (suburbs and small towns, as opposed to rural and inner-city areas) because they have different stressors and challenges.
- The Landscape and Urban Planning journal published a new study finding that upward mobility is significantly higher in compact areas than in metropolitan areas due to job accessibility.
February 4, 2016 | Permalink | No Comments
February 3, 2016
Dirt Law Jobs Up
The National Jurist quoted me in Hot Practice Areas For J.D.s. It opens,
Real Estate is hot again
Real estate is one of the most fickle industries around — hot when the economy is growing and cold when it is not. The good news is that real estate is growing again and that means more jobs for entry-level attorneys.
Robert Half Legal, a legal staffing agency, reports that real estate lawyer is the third most in-demand legal position in the South Atlantic region. Real estate is the second-fastest-growing legal industry in the South Atlantic region and the fourth fastest in the Mountain and Pacific regions.
At Brooklyn Law School, real estate law has become the most popular specialization. Graduates are finding more jobs in the specialization’s niche areas such as cooperative and condominium representation, said professor David Reiss.
“This is, in part because of our externship program that provides students with experience in the applicable government agencies and law firms, but also because of our Real Estate Certificate program, our wide array of real estate courses and the availability of courses at nearby urban planning schools,” Reiss said. “We also offer a Real Estate Law Certificate, and we find that most or all those receiving certificates are employed pretty quickly in any given year.”
Richard Hermann, a professor of Concord Law School who has written extensively about legal careers, recommends earning certificates in niche areas of the law, as they are inexpensive ways to increase your qualifications.
“Many such programs are available, and quite a few are online and inexpensive,” he said.
While real estate can be up and down, Reiss said real estate law could be a good field even during slower economic times.
“No matter what the economy as a whole is doing, clients are still buying and selling properties, financing and refinancing them, entering into property leases”, he said.
To prepare for careers in real estate law, Brooklyn Law School encourages its students to have very focused resumes, which increases their marketability. “We find that students with focused with focused resumes, can make a compelling case to a range of real estate employers, even if their overall GPA is not high,” Reiss said.
February 3, 2016 | Permalink | No Comments
Wednesday’s Academic Roundup
- Can Short-Term Rental Arrangements Increase Home Values?: A Case for Airbnb and Other Home Sharing Arrangements, Jamila Jefferson-Jones, The Cornell Real Estate Review, Vol. 13, June 2015.
- Residential Land Values in the Washington, DC Metro Area: New Insights from Big Data, Morris A. Davis, Stephen D. Oliner, Edward Pinto & Sankar Bokka.
- The Law of Banksy: Who Owns Street Art?, Peter N. Salib, University of Chicago Law Review, Vol. 83, No. 4, 2016.
- An Ethnic Roller Coaster: Disparate Impacts of the Housing Boom and Bust, Olga Gorbachev, Brendan O’Flaherty & Rajiv Sethi.
- Measuring House Price Bubbles, Steven C. Bourassa, Martin Hoesli & Elias Oikarinen, Swiss Finance Institute Research Paper No. 16-01.
- Cause for Rebellion? Examining How Federal Land Management Agencies & Local Governments Collaborate on Land Use Planning, Michelle Bryan, 6 Journal of Energy & Environmental Law 1 (2015).
- Macroprudential Regulation of Mortgage Lending, Steven L. Schwarcz, Southern Methodist University Law Review, Forthcoming.
- Fee Simple Obsolete, Lee Anne Fennell, University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 739; U of Chicago, Public Law Working Paper No. 559.
- Financial and Housing Wealth, Expenditures and the Dividend to Ownership, Sheng Guo & William G. Hardin III.
- Macroeconomic Effects of Bankruptcy and Foreclosure, Kurt Mitman, CEPR Discussion Paper No. DP11043 (Paid Access).
February 3, 2016 | Permalink | No Comments
February 2, 2016
Luxury Real Estate and Transparency
Law360 quoted me in Atty-Client Privilege At Stake In Real Estate Bill (behind a paywall). It opens,
The push to reveal the individuals involved in anonymous real estate deals has moved from title insurers to attorneys and real estate agents, but lawyers say requiring them to reveal the names of clients they help set up limited liability companies and other vehicles could weaken attorney-client privilege.
Reps. Carolyn Maloney, D-N.Y., and Peter King, R-N.Y., plan to reintroduce legislation this week that would require states to collect the beneficial ownership information for limited liability companies and other vehicles used in real estate transactions, or to have the U.S. Department of the Treasury step in if states are unable to meet the requirement, in order to prevent criminals, corrupt government officials and terrorists from using real estate purchases to launder funds.
Doing so would close a loophole that allows attorneys to advise clients without meeting the same reporting requirements as banks and would help prevent potentially illicit funds from making their way into real estate markets, Maloney said. But it also has the potential for putting attorneys in the uncomfortable position of reporting clients to the government in cases where there may not be a criminal violation, said Marc Landis, the managing partner of Phillips Nizer LLP.
“This will certainly be an area where client confidentiality and attorney-client privilege will be weakened in ways that they have not been previously,” he said.
Lawyers in real estate transactions came under renewed attention after the transparency advocacy group Global Witness and the CBS News program “60 Minutes” released a blockbuster report Sunday night that showed several New York law firms providing information to an individual posing as an adviser to a minister from an African government who was looking to buy a Gulfstream jet, a yacht and a New York brownstone without the money being detected.
According to the report, which used hidden cameras, 12 of 13 lawyers provided assistance when asked how to set up shell companies and other vehicles to avoid attaching a name to the purchases. One of those 12 later said he wouldn’t participate in the transactions.
The Global Witness report found that the attorneys — none of whom signed the group’s investigator as a client — broke no laws in providing the advice they did. And that’s a problem that Maloney wants to address.
“This is unacceptable, criminal, scandalous, and it has to stop,” she said on a conference call with reporters.
The New York Democrat’s solution to the problem is to require states to force attorneys, real estate agents and other advisers on a transaction to include the name of the beneficial owner of an LLC or trust on forms submitted to the state. If the state will not or cannot implement such a system, the Treasury Department, through the Financial Crimes Enforcement Network, would require that disclosure.
In a similar move, FinCEN last month announced that title insurers would temporarily be required to provide the names of beneficial owners of LLCs that high-net-worth individuals use to purchase luxury real estate in Miami and Manhattan without mortgages.
Maloney’s bill, which she is introducing for a third time, will expand such reporting and make it permanent.
“We’re going after the loophole. We’re going after the real estate transactions. We’re going after the realtors and some lawyers that are setting these things up,” she said.
According to Brooklyn Law School professor David Reiss, Maloney’s bill, the Incorporation Transparency and Law Enforcement Assistance Act, has struck a good balance between giving law enforcement the power to root out illicit funds in high-end real estate and not infringing too much on attorney-client privilege.
“The attorney-client privilege is one of the oldest of the privileges recognized by courts, and in the aggregate it provides great benefits to society because it promotes open communications between clients and their lawyers. The privilege is not a shield for illegal behavior, though,” he said.
February 2, 2016 | Permalink | No Comments
Tuesday’s Regulatory & Legislative Roundup
- The Federal Housing Administration has announced its new multifamily insurance rates, which show a reduction encouraging capital financing of affordable apartments.
February 2, 2016 | Permalink | No Comments
