Category: Legal/Legislative Update

LABOR STRENGTH The big economic news for this month is the much stronger than expected employment report; the big question is, why in the face of strong labor market, consumer spending (reflected in retail sales) has been trending steadily downward. Employers added 313,000 jobs in February, representing the largest monthly increase in nearly two years. Positive labor reports and increasing confidence in the economic outlook lured more than 800,000 workers off the sidelines, holding the [Read More...]

HOUSING CRISIS Sounding an alarm that usually comes from housing advocacy groups, a multifamily developer is warning of an impending crisis in the rental housing market – the result of a mismatch between supply and demand. His message: Although the luxury market is overbuilt, or close to it, and the need for affordable housing acute, developers continue to add supply at the high end, because affordable rents can’t cover rising construction costs. “The two-by-four doesn’t [Read More...]

LEGAL BRIEF TIME LIMITS A New Hampshire Supreme Court decision holding that developers aren’t subject to statutory time limits on phased condominium developments has focused industry attention on what condo developers can do and when they can do it. Addressing a different fact pattern and using a different rationale, the Delaware Supreme Court reached the same conclusion. (Bethany Marina Townhouses v. BMIG, LLC.) The original plans called for 14 buildings in this community, only 11 [Read More...]

TIPPING POINT Housing industry executives have warned that the tax reforms Congress enacted will undercut incentives for home ownership. Researchers at the Urban Institute have drilled down on that theory to determine how the changes—primarily the increase in the standard deduction and caps on deductions for mortgage interest, state and local property taxes) will affect the buy-vs. rent equation (when it is more cost-effective to own than rent) for families in four different income brackets. [Read More...]

A HEALTHY START The consensus view of economists last year was that both inflation and unemployment would be higher at year’s end. They were wrong on both counts. Inflation has remained stubbornly (and surprisingly) below the Federal Reserve’s targets, and the employment market has been strong. The 148,000 jobs created in December fell well short of expectations, but the number was positive (employers hired more folks than they fired) for the 87th consecutive month, extending [Read More...]

TRENDING OLDER The rental population is trending older and wealthier, the shortage of affordable apartments is becoming more acute, reflecting demographic trends and public policies that are changing the face of the apartment market. Those conclusions come from the 2017 rental housing report published Harvard’s Joint Center for Housing Studies. The report describes two categories of renters: Older, affluent individuals, at or near retirement age, who are choosing to rent, rather than buy, and are [Read More...]

NO SURPRISE In a move that had been telegraphed clearly, the Federal Reserve boosted its benchmark rate for the third time this year. The one-quarter-of-a-point increase pushed the target range to between 1.25 percent and 1.5 percent. Citing the strengthening economy, and expectations that current positive trends will continue, the rate-setting Federal Open Market Committee indicated that it is anticipating three more rate hikes next year. The December decision was the last to be overseen [Read More...]

ENCOURAGING SIGNS If you’re looking for encouraging signs in the housing market, you can find them in October’s existing home sales, which hit their highest pace in five months. Of course, if you’re looking for evidence that the market is stumbling, you can find that too. October sales fell below the 2016 total, notching their second consecutive year-over-year decline. “Robust” job growth and moderate wage gains are fueling demand, but limited inventories are undercutting it, [Read More...]

A TAXING EFFORT Who knew tax reform would be so difficult? The tax bills proposed in the House and Senate won’t find an easy route to enactment. Although the House has passed its version of tax reform, it differs from the Senate bill in several key respects, so a conference committee will have to reconcile those differences. Many of the potential sticking points are real estate-related, primary among them: The treatment of the mortgage interest [Read More...]

BIG NEWS It is difficult to remember a time when condominiums weren’t part of the housing landscape. It is also unlikely that many early advocates of this ownership option envisioned just how large a space it would occupy. More than 20 percent of the U.S. population now resides in a common interest ownership community. That translates into 67.8 billion people living in approximately 345,000 condominium communities – compared with about 2.1 million residents in 10,000 [Read More...]

CHINK IN MORTGAGE INTEREST ARMOR Reversing a long-standing policy and diverging notably from other housing industry trade groups, the National Association of Home Builders announced recently that it would not oppose eliminating the tax deduction for mortgage interest payments as part of a broad reform of the tax code, as long as the plan includes a tax credit for homeownership. “Now our policy is much more flexible,” NAHB President Jerry Howard, told Reuters. President of [Read More...]

BAFFLED BUT UNDETERRED Although Fed Chair Janet Yellen admits that policy makers are baffled by persistently low inflation, they are undeterred by the failure to meet the 2 percent target they have set as the indicator that higher interest rates are in order, and still on track to boost interest rates once more this year. They remain convinced that the declining unemployment rate – now near a 16-year low – will begin to stoke inflation [Read More...]

TIME TO WORRY? The housing market weakened in July as the chronic inventory shortage worsened and the rising prices it has triggered undercut buyer demand. New home sales declined by 9.4 percent to an annualized pace of 571,000 units – almost 9 percent below the year-ago rate and the slowest annual pace in three years. “It has been surprising the extent to which new home sales have not picked up more,” Aaron Terrazas, a senior [Read More...]

FAMILIAR BUT NOT THE SAME Home equity loans and “cash-out’ mortgage refinances – two enduring symbols of the excesses that triggered the financial meltdown a decade ago – are becoming popular again. But industry experts insist that they are a sign of economic health, not a harbinger of another economic disaster. Lenders approved nearly $46 billion in new home equity lines of credit in the second quarter – the highest level since 2008, according to [Read More...]

LABOR MARKET REPORT SIZZLES To a summer that has been sizzling in many parts of the country, the Department of Labor’s July employment report delivered some additional heat. Employers added 209,000 workers to their payrolls, beating the consensus estimate and indicating that the nine-year-old economic recovery still has legs under it. Revisions added 2,000 jobs to the May and June totals, the unemployment rate dipped a little and average hourly earnings – a source of [Read More...]

COMING SOON BUT NOT YET The Federal Reserve has implemented two consecutive interest rate increases (in March and June) and is planning to boost rates at least once more before year-end – but not quite yet. Citing “realized and expected labor market conditions and inflation” after its July meeting, the Federal Open Market Committee, Fed’s rate-setting arm, left the federal funds rate unchanged at 1-1/4 percent. The committee also signaled its intention to begin paring [Read More...]

A HIGH NOTE Massachusetts lawmakers working on implementation language for the voter referendum legalizing recreational use of marijuana in the state have agreed on a compromise that would tax retail sales of the drug at a 20 percent rate. The House version of the bill had called for a 28 percent rate; the Senate version retained the 12 percent rate proposed in the initiative voters approved last November. The 20 percent tax on marijuana sales [Read More...]

MOOD CHANGES This could be good news for the inventory-starved housing market. More than 70 percent of the homeowners responding to the National Association of Realtors’ (NAR’s) quarterly HOME survey said they think this is a good time to sell. If those sentiments turn into listings, they could bring a measure of relief to a housing market plagued by a persistent lack of homes available for buyers who want to purchase them. While owners are [Read More...]

NO FED SURPRISE Predictions that the Fed would increase interest rates at its June meeting were virtually unanimous, and the Federal Open Market Committee, the Fed’s policy-making arm, didn’t surprise or disappoint. The 25 basis point increase the committee announced, its third consecutive adjustment, pushed the target range for the Fed Funds rate to between 1 and 1.25 percent. The increase “reflects the progress the economy has made,” Fed Chair Janet Yellen said in a [Read More...]

FLOOD INSURANCE REFORM Congressional lawmakers have launched a bipartisan effort to reform the troubled federal flood insurance program. Rep. Sean Duffy (R-WI), chairman of the subcommittee that oversees the National Flood Insurance Program (NFIP) unveiled draft legislation that incorporates a broad range of ideas supported by Republicans and Democrats Draft legislation aimed at stabilizing the financially fragile program. Key provisions would: Restrict or bar coverage for properties in high risk areas that file multiple insurance [Read More...]

© 2018 Marcus Errico Emmer Brooks PC