Fiscal Cliff: What’s at Stake for Real Estate

The “fiscal cliff” has quickly become a commonly used term, but exactly what it means isn’t all that clear, especially for real estate. At it’s most basic level, it refers to sweeping tax cuts enacted a decade ago that will expire at year’s end, so tax rates will automatically rise to where they were before, while at the same time automatic spending cuts—the sequestration enacted when the government’s borrowing limit was raised a year ago–will take effect. Thus, the economy faces a two-pronged hit: taxes going up while federal fiscal spending goes down.

If Congress does nothing, that double hit would mean a negative economic impact of about $650 billion, enough to shrink the economy by 4 percent and push the country back into recession, says NAR Chief Economist Lawrence Yun.

For real estate, that has the potential to derail the recovery that’s been slowly taking hold. Foreclosures would rise, home values would drop, hurting households but also hurting FHA, which could get hit with another wave of bad loans. That could put FHA into financial trouble.

Against this background, the federal government will be looking at a lot of options for averting the cliff while also lowering the federal budget deficit for the long-term. That puts the mortgage interest deduction in the spotlight. But is it a good idea to make changes to that tax provision?

Without a doubt, changing the rules of the game on MID now would mean a tremendous hit on real estate markets and household finances, and it could deal a blow to the broader economy, says Yun.

He and NAR economist Danielle Hale look at the different pieces in play under the fiscal cliff debate and also the economic impact of changing MID in the 9-minute video found by clicking the link below. The information is intended to be helpful as you try to put the fiscal cliff conversation into perspective.

Fiscal Cliff: What’s at Stake for Real Estate

NAI Norwood Group Sells 120,000± SF Retail Building in Derry NH

Derry, NH (March 22, 2013) – NAI Norwood Group is pleased to announce the sale of the former Walmart retail property at 30 Manchester Road in Derry NH. The 120,000± SF on 15 acres became a surplus property when the new super Walmart Center opened in late 2012. Brian O’Brien, VP/Managing Broker of NAI Norwood Group Portsmouth, represented the seller in the transaction. Ocean State Job Lot bought the property and plans to occupy a portion of the building and redevelop the balance into a multi-tenant retail center. NAI Norwood Group is slated to stay on as the leasing agent.

“This was an excellent opportunity for NAI Norwood Group and NAI Global to come together in a successful transaction for a large corporation like Walmart,” said O’Brien.

Walmart left the property on 30 Manchester Road to move across the street to their new Super Walmart location at 154,551± square foot facility. Located just 2.6 miles off Route 93 this corridor has seen a momentum of retail action. In 2011 Woof Meow, a pet company moved in adjacent to the new Panera Bread in newly developed Pinkerton Place. Both deals were brokered by NAI Norwood Group. Soon the road widening will be done, giving a smoother drive and a much cleaner look to one of Southern New Hampshire’s newest retail corridors.

NAI Norwood Group is an affiliate of NAI Global, the world’s leading managed network of independently owned commercial real estate brokerage firms.  Through this network of 355 offices in 55 countries, NAI Norwood Group is able to leverage their 40+ years of dedicated local experience around the world. With our extensive background and strong local contacts, we are able to assist individual corporations in negotiating leases, sales, business brokerage, investments, relocation, site selection and development. For more information please visit www.nainorwoodgroup.com. Or contact one of our offices: 116 South River Road, Bedford, NH 03110, (603)668-7000 or 100 Market Street Suite 200, Portsmouth, NH 03801 (603) 431-3001.