A hospital chain’s financial illness, an uncommonly generous charitable donation and Sweden ignoring Jerome Powell’s lead. From the wild and wooly world of real estate, here are the Hits and Misses for the week of May 6-10.
Miss: Is There a Doctor in the House? One of the most dramatic real estate news stories this week involved the Chapter 11 filing by Dallas-headquartered Steward Health Care System, the nation’s largest physician-owned hospital operator. Steward operates 33 community hospitals in nine states and has more than 30,000 employees. Steward plans to address its $9 billion in liabilities by putting all of its hospitals up for sale – and perhaps that could help cover the company’s $6.6 billion in long-term rent obligations, most of which is owed to Medical Properties Trust, a real estate investment trust whose fortunes have frayed thanks to Steward.
Hit: Very Sweet Charity. Former Washington Commanders owner Dan Snyder gave up on his efforts to sell his mansion in Potomac, Maryland – according to the Wall Street Journal, he listed it for $49 million in February 2023, then reduced the price to $34.9 million before removing it from sale in March. Snyder opted to donate the property to the American Cancer Society, which turned around and relisted the property for $34.9 million. While Snyder gets a handsome tax deduction for this uncommonly generous charitable donation, the American Cancer Society could potentially reap significant financial rewards if a seller is secured. Talk about a win-win situation!
Miss: Those Were the Days, My Friend. A new Zillow survey published this week found 44% of Americans would buy their childhood home if cost were not an issue – and it is very much an issue, because only half of the survey’s respondents said they could afford to buy their childhood home at today’s prices. Manny Garcia, a senior population scientist at Zillow who conducted this research, said the results showed Americans carried a nostalgia for “a simpler time in their lives when home was a place of comfort and safety.” Maybe, but perhaps they are also eager for a new era when affordable homeownership is not an elusive concept.
Miss: Soak the Massachusetts Rich. A new proposal by Massachusetts Gov. Maura Healey would enable cities to enact a transfer fee ranging from 0.5% to 2% on property sales greater than $1 million. The money raised from this new tax would be channeled into state-sponsored affordable housing projects. However, the average Massachusetts home value is $612,509 while in Boston that price is $960,000. In a state with the unofficial nickname of “Taxachusetts,” Healey’s idea feels like a surefire strategy to self-immolate her career.
Hit: A New Stockholm Syndrome. There were two big news stories out of Sweden this week: the annual Eurovision music competition (which is not the focus of this website – sorry, folks) and the news that Riksbank, the nation’s central bank, reduced its main interest rate by 0.25 percentage points to 3.75%. This was the first rate cut for Sweden in eight years and the first time the Riksbank enacted a rate cut ahead of the Federal Reserve in this century. The central banks in Switzerland, Czechia and Hungary recently had their own rate cuts, while the Bank of England and the European Central Bank are reportedly ready to follow this trend in June. Now, when is Jerome Powell going to take his foot of the brake and start fixing the “transitory” mess that he created?
Miss: Say What, Joe? Perhaps the most embarrassing interview conducted this week was President Biden’s one-on-one with CNN’s Erin Burnett. Biden falsely claimed that inflation was at 9% when he came into office – it was actually at 1.4% and went up to 9% during Biden’s administration. He boasted that he’s “working very hard to bring the cost of rentals down, to increase the number of homes that are available” – in reality, costs are far above pre-pandemic levels and show no sign of declining while there is no evidence that his alleged hard work created more new listings. He claimed inflation was the result of “corporate greed going on out there and it’s got to be dealt with” – an opinion shared by Elizabeth Warren-style progressives but not by any serious economist. And when asked to comment on polls that showed how Americans are unhappy with his handling of the economy, Biden angrily stated that the “polling data has been wrong all along.” No further comment is required.
Phil Hall is editor or Weekly Real Estate News. He can be reached at [email protected].
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