Inside Word from @realDonaldTrump Economic Team Meeting

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December 7, 2016

Inside Word from @realDonaldTrump Economic Team Meeting

The Collingwood Group Chairman Tim Rood will be at a meeting this morning with President-elect Donald Trump’s Economic Team, in New York.


>Collingwood’s Rood then joins CNBC Power Lunch at 1PM ET with the inside word on the Trump team meeting, TUNE IN!

Yes, President-elect Donald Trump may have chosen Ben Carson to lead the Department of Housing and Urban Development, but as the U.S. housing market revs its engines as 2016 draws to a close, an army of homeowners, real estate professionals and economists are focused on cheering on a potentially rosy market in 2017.

And with good reason.

According to the S&P CoreLogic Case-Shiller Indices released on November 29, U.S. housing prices rose, on average, by 5.5% from September, 2015 to September, 2016. Some U.S. regions showed double-digit growth for the time period – Seattle, saw an 11.0% year-over-year price increase, followed by Portland, Ore. with 10.9% and Denver with an 8.7% increase, according to the index.

The data point to further growth next year, experts say.

“The new peak set by the S&P Case-Shiller CoreLogic National Index will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance,” notes David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “While seven of the 20 cities previously reached new post-recession peaks, those that experienced the biggest booms — Miami, Tampa, Phoenix and Las Vegas — remain well below their all-time highs. Other housing indicators are also giving positive signals: sales of existing and new homes are rising and housing starts at an annual rate of 1.3 million units are at a post-recession peak.”

But there are question marks heading into the new year for the housing market. The surprise election of Donald Trump as president has industry professionals openly wondering how a new Washington regime will impact the real estate sector, one way or another.

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Toll Brothers Sees Strong 2017, Powered by Millennial Buyers

Toll Brothers Inc. on Tuesday again reported double-digit revenue growth in its latest quarter and projected continuing strong performance in 2017 as the home builder lures millennial buyers.

Chief Executive Douglas Yearley Jr. said in prepared remarks that about 22% of the company’s settlements included one primary buyer who is 35 or younger. Many are snatching up urban condos and rental apartment properties, as well as Toll Brother’s core suburban homes.

“With the millennial generation now entering their thirties and forming families, we are starting to benefit from the desire for home ownership from the affluent leading edge of this huge demographic wave,” Mr. Yearley said.

Results in the fourth quarter were broad-based across the country, with every region showing contract growth for its traditional home building business.

However, the company reported fewer contracts for its City Living division, which builds urban apartments. Revenue in the segment decreased sharply to $13.9 million from $131.1 million in the year-ago period. The average price per unit jumped to $2.3 million from $1.7 million.

As a luxury home builder, Toll Brothers has faced concerns about exposure to high-end markets that are softening, including New York City. The company on Tuesday gave a rosy outlook for performance in its current year, with Mr. Yearley noting “positive demand trends in many regions.”

Over all for the October quarter, Toll posted a profit of $114.4 million, or 67 cents a share, down from $147.2 million, or 80 cents a share, a year prior.

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>An Open Letter to Toll Brothers from Collingwood Managing Director Tom Cronin:

Nice results, but not an answer. To much, high end, affluent leading edge (a fraction of millennial), increased prices reduce participation/revenue.

Rock on Robert Toll! Congrats to your share holders!

Now, how about coalescing with your fraternity brothers at NAHB and scripting a SPECIFIC set of actions required to build a $200,000 home in high cost areas or $125,000 homes in middle America.

I’m not saying the home ownership rate needs to be back at 69%. I don’t know the right #, but it won’t improve at all without a road map.

Not everyone should own a home, but if ownership represents the foundation for building a family’s wealth, if home building and its multiplier effect, along with job creation and the tremendous economics that result are not myths, it’s time for leadership and a rolling up of sleeves, by industry, to develop this road map.

No sacred cows, this is what we need:

– from regulators

– environmentalists

– home builders

– lenders

– trade groups

– community groups

A special Task Force with a specific objective.

I have eliminated the consumer advocacy in the initial lift.

We should take them a thoughtful solution and get the political crap off the table.

Facts, reasonable economics, responsible variances, prioritization.

I think if we can segregate a dedicated team for each interest group, we can come up with a plan to reverse tides…….. think Rosie the riveter!

P.S. I am neither a Republican nor a Democrat. I am certainly neither progressive or right wing. This ain’t about charity or social programs. It’s about business and economics. It’s in the National interest.

We’re 8 years into our recovery. Let’s spend the next 6 months focusing on a plan.

Thomas P Cronin, CMB,

Partner & Managing Director

Red State Homes Are Luring Young Blue Buyers Inland

Dayton, Ohio, gave the world the Wright Brothers and the electric cash register. As recently as 1990, manufacturing jobs there were the backbone of the local economy. But in the two decades since, the area has lost thousands of blue-collar jobs, and the local housing market still wears the scars of the foreclosure crisis.

Those attributes make the city representative of the Rust Belt malaise that carried Donald Trump to his electoral college victory. Montgomery County, composed of Dayton and its environs, opted for President Barack Obama in 2008 and 2012. This year, the county favored Republican Trump over Democratic nominee Hillary Clinton by 1.3 percentage points, or about 3,000 votes.

But the demographics that shifted to the real estate mogul’s favor in places like Dayton may be short lived. Health-care companies and Internet marketers are powering a nascent knowledge economy in the Ohio city, one that also boasts an innovation district seeking to lure tech companies from more expensive locales. City developers have spent recent years trying to replicate the success of the Cannery Lofts, a trendy Dayton rental building carved out of an old downtown warehouse. And there are three new microbreweries and a handful of historic districts where listings pitch homes to “urban pioneers.”

That mix of urban renaissance and bargain real estate has made the city appealing to young workers. During the first 10 months of this year, 51 percent of homebuyers were under 35 years old. That’s the highest share in the U.S., according to a analysis.

Clinton’s loss despite her 2.5 million popular-vote lead over Trump illustrated the concentration of traditional Democratic voters in a handful of coastal states. Will the appeal of cheap housing help Midwest cities such as Dayton attract young, well-educated workers? And if they do, will they change the political culture of states that turned away from the Democrats on Nov. 8?

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Pop-Ups Serving as Band-Aids for U.S. CRE

When 87 Christopher Street hit the NYC market in August, the owners hoped to snag a long-term retail tenant. But after months rolled by and the space stayed vacant, the owners moved to plan“It’s an opportunity for the landlord to capture some short-term cash,” said Jason Fein, a partner at ABS Partners Real Estate TRData LogoTINY who represents the ownership. And while they continue to look for a long-term tenant, “things always show better when they’re alive,” he added.

Uncertainty continues to plague the city’s retail market. Asking rents have dipped across large parts of Manhattan, according to a recent retail report from the Real Estate Board of New York. Availability rates increased year-over-year in almost every retail submarket of the borough last quarter, according to an analysis by Cushman & Wakefield. Faced with a market in which tenants aren’t signing up for pricey long-term leases, landlords have had to adjust, and are more open to short-term leases.

“The reality is that there are some vacant spaces that are spending a long time on the market,” said Meagan Bonan, a Cushman retail broker whose clients are increasingly asking her to look out for short-term tenants. Pop-ups, she added, “bring cash flow to a space and allow ownership to really wait for the right tenant long-term.”

Concern that Manhattan’s retail market is a bubble about to burst has been brewing for some time, and many of the city’s major shopping districts — like Fifth Avenue between 42nd and 49th Street, Madison Avenue, Times Square, Meatpacking and Soho — have availability rates of more than 20 percent. “Some landlords ask very aggressive rents and tenants say, ‘huh, no, I need to make money,’” said Lisa Rosenthal a broker at Lansco Corporation.

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Disruptors: Amazon Moves to Cut Checkout Line, Promoting a Grab-and-Go Experience

There is almost no aspect of retail that Amazon has not upended with online shopping. Now, the company is trying to computerize the experience of buying sandwiches and soda from the corner convenience store.

In the latest in its expanding set of experiments involving bricks-and-mortar retail stores, Amazon has created a small grocery store in Seattle that will allow customers to pluck drinks, prepared meals and other items off shelves and walk out without having to wait in a checkout line, the company said.

Amazon said on its website that a smartphone app and various other types of technology in the store had eliminated the usual bottleneck of cashiers and registers that typically stand between shoppers and the store exit.

For now, only Amazon employees can shop in the 1,800-square-foot store, which is on the ground floor of one of the company’s new office towers in downtown Seattle. The company said that it planned to open the store to the public early next year and that it would offer chef-made meal kits with ingredients for quickly preparing dinners at home.

“Four years ago, we started to wonder: What would shopping look like if you could walk into a store, grab what you want and just go?” a narrator says in a video about the store concept, called Amazon Go, which the company posted online on Monday.

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The Trump Transition
Carson Conundrum

Reaction flooding in to President Elect Donald Trump’s choice, tapping Ben Carson as his nominee for Housing Secretary.

Collingwood Group Chairman Tim Rood on Fox Business’s Cavuto said, “Dr Carson is an intelligent, impassioned, and empathetic individual.”

tim carson.jpg

As for his lack of experience in the housing arena that may be a positive, Collingwood’s Rood says, “Sometimes the very best policy makers are those who listen; and sometimes, good leaders who are not steeped in the subject matter are better listeners than those who believe they have all the answers.”

>Click Here for Collingwood Chairman Tim Rood’s full interview on FBN’s Cavuto

B.Montgomery_-_Head_Shot.jpgCollingwood Group Deputy Chairman Brian Montgomery tells Westwood One’s First Light radio show, “There is little doubt President-elect Trump greatly admires and respects Dr. Ben Carson and felt strongly about him joining his Cabinet.

Having spent almost eight years in the Executive Office of the President, I speak from experience in saying a Cabinet Secretary who has the ear of the President is a positive for that agency and individual.  In this instance, I think Dr. Carson will be able to “elevate” the issue of Housing within the Trump Administration.  The fact Dr. Carson is a household name I believe will provide him a larger platform to articulate his vision for how best to help tackle any number of issues within the housing arena: shortage of affordable rental housing, the impact of new regulations which have constricted the mortgage market, and the growing senior population and how best to address their housing need.,”

sharga tv.jpg“Dr. Carson’s nomination is an indication of the tremendous respect that President-Elect Trump has developed for his former rival,” says Ten-X EVP Rick Sharga.Sharga adds “Dr. Carson has spoken out in the past about the need to revitalize many of the country’s urban areas, so it wouldn’t be a surprise if he focuses on doing that, and trying to find solutions to the growing problem of affordable housing. Since Dr. Carson has also discussed the unintended consequences of over-reaching government regulations, it’s possible we may also see some streamlining, or regulatory relief as well.”

By the way, Fannies’ stock price ended the day down 5 percent, Freddie’s is down 6 percent, and both were going even lower in after-hours trading

-“The Trump Effect” on Housing, The Collingwood Group Chairman Tim Rood on Fox Business’s Cavuto: chicago.jpg?v=TqPcoYyJuo

-Rood on the National Business Report  >CLICK HERE TO WATCH: Group’ Chairm

-Collingwood’s Rood on Business First AM >CLICK HERE TO WATCH:

-Rood with the trifecta, a third television interview from the Chicago Board of Trade >CLICK HERE:

Will Trump Tackle Housing Finance Reform?

Housing was the talk of the campaign two presidential elections ago, but it stayed under the radar in the 2016 race, leaving plenty of room to speculate about President-elect Donald Trump’s likely mortgage policy for the next four years.

On the one hand, without a crisis, observers said there is little incentive for him to move quickly on the issue.

But the unresolved question of what to do with Fannie Mae and Freddie Mac – both in conservatorship since before Barack Obama’s election – will loom large over the future Trump administration.

Exactly how Trump would address the issue is a complete mystery. The issue was never raised on the campaign trail.

“If you read the republican party platform, it is pretty obvious the Republicans are for less government in housing,” said Brian Montgomery, vice chairman of The Collingwood Group and a former Federal Housing Administration commissioner.

But no one expects sweeping action because other issues are higher priority, such as health care reform.

“If you ask most lenders, the market works today,” says Patrick Sinks, the chief executive of MGIC Investment Corp. and the chairman of U.S. Mortgage Insurers, a trade group for the private mortgage insurance industry.”A lender wants to originate a loan, insure that loan and turn around and sell that loan to the GSEs and replenish their capital and start the process over again. That works. And it keeps humming along.”

As long as that remains true, the incentive to make big chances won’t be there.

“The bigger issue is what the right role for government in housing is,” Sinks said. “That’s going to take legislative action and [lawmakers in either party] just don’t seem to be in a hurry to resolve it.”

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Industry Insight: The Opportunity for Change in Housing Policy

DS News covered what the future of loss mitigation will look like after the expiration of HAMP on December 31, 2016. To explore the topic further, DS News sat down with Meg Burns, Managing Director of The Collingwood Group, to discuss the opportunities that come from pairing a new administration with housing policies such as loss mitigation, regulatory compliance, and more.


Burns joined The Collingwood Group in 2014, and as Managing Director, supports the firm’s Business Advisory and Business Development practices. Prior to Collingwood, Burns served as the Senior Associate Director of the Office of Housing and Regulatory Policy at the Federal Housing Finance Agency (FHFA). There, she managed various policy and regulatory initiatives involving single-family and multifamily finance and loss mitigation strategies, as well as insurance-related activities of the government-sponsored enterprises. As such, she was actively involved in industry-wide discussions regarding the role of the federal government in addressing the mortgage crisis.

With the end of HAMP drawing close, what is to come for loss mitigation?

The fact that the sunset of HAMP coincides with the arrival of a new leadership team in Washington is a great opportunity because there is a chance for a really fresh policy dialogue. The good news is that the industry has a lot of work that has been underway for quite sometime now to put forward a good plan for a new set of loss mitigation strategies including a particular set of modifications. It is a very cool time for HAMP to be expiring in some respects and I think that what we will see are some programs that really do reflect the lessons that have been learned. I also think that the reason a new leadership team in Washington is so helpful is because we can have really honest discussions and assessment of what those lessons learned are. It is often a lot easier for a new group of policy leaders to embrace the policy achievement of the team before them but also to acknowledge program flaws without feeling defensive or like they were integrally associated with them. At its core, what was reaffirmed through the HAMP experience was something that most good policymakers know very well which is that complicated program rules generally translate into fewer program beneficiaries. In the HAMP space there was an extended period where they were really striving for perfection and precision both in the data collection aspect and some of the calculations to determine who was eligible. One of the lessons learned in HAMP is that striving for that perfection and precision really rendered  fewer distressed borrowers eligible. I think that what we will see are the modifications that replace HAMP will be modifications that follow some basic rules rather than complex calculations.

Aside from HAMP, what other policy changes might be impacted by the entrance of a new administration?

I think there is tremendous opportunity across the board and I think that the new leadership team has certainly publicly acknowledged a concern with the heavy-handed nature of the regulatory framework in Washington D.C. today. If the new team begins their policy discussion from that perspective, there is a chance that we will see some of the very aggressive enforcement activity move into a space where those who are responsible for monitoring the leading communities activities will start to identify problems and issues but more for the purpose of addressing them and resolving them as opposed to taking very stringent enforcement actions. That type of enforcement outcome clearly has resulting in less lending activity and stifled access to credit. There is a huge opportunity for the Trump Administration to revisit the way rules have been enforced and to take a more relaxed approach not to identifying problems, but to how those problems get resolved. That should make a big difference for lending activity in the country and help more consumers.

Do you think that taking a relaxed approach will possibly improve homeownership?

I do. I think that the nature of the regulatory expansion over the past eight years has affected home sales. The cost in certain parts of this country to build homes has increased so substantially that it’s almost impossible in certain communities to construct starter and affordable homes. I think there is certainly a good opportunity for this new administration to take a look at ways to reduce some of that regulatory activity to the extent that the federal government has a role. This will also impact the lending space where there have been a lot of new regulations put in place as a result of Dodd-Frank in part. They have had a suffocating effect on the ability of lenders to reach the population of borrowers who are most in need of affordable financing options.

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Housing’sTrump Card

What might housing policy look like under the new Trump administration, and how will Trump work with Congress on housing policy?

In the limited moments that Trump has shared his thoughts on what he would do with the housing market, he stated that one of the big issues facing the housing industry is regulation.

In his speech at the National Association of Home Builders’ 2016 Midyear Board of Directors Meeting in Miami, Florida, Trump said, in particular, there is no group regulated harder than the housing industry. Trump said these regulations kill not just the small businesses but jobs in general. Trump shared that he plans to eliminate these regulations and instead implement a method of creating jobs without regulation.

Likewise, in an interview with Reuters in May, Trump said he plans to overhaul the controversial Dodd-Frank Wall Street Reform and Consumer Protection Act that was passed in 2010 in response to the crisis.

“Dodd-Frank has made it impossible for bankers to function,” said Trump. “It makes it very hard for bankers to loan money for people to create jobs, for people with businesses to create jobs. And that has to stop.”

A lack of priority for housing in Congress is something those in the industry hope to see change with this newly elected house.

“It’s amazing that something so vital as housing to the overall health of the American economy and the average American – is something Congress still can’t rally in support of resolving – especially when the risks associated with continued failure to do so are potentially so serious,” says Brian O’Reilly, The Collingwood Group President. “The facts are that housing is a critical component of overall economic health in the US. Thus, continued failure by Congress to address housing reform is reckless and irresponsible.”

Collingwood’s Montgomery adds that he hopes both sides will heed the words of Franklin Roosevelt, who on the eve of his re-election in 1936 while citing the amount of work to be done said, “we will keep our sleeves rolled up.”

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Have a productive day and a great week ahead!

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