Legal/Legislative Updates

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...]

FED STANDS PAT The Federal Reserve left interest rates unchanged at its April meeting, but remains on course to boost rates at least twice before the end of this year. Some analysts had predicted that the sharp decline in the March employment numbers, compounded by the first quarter’s disappointing 0.7 percent increase in economic growth might give the Fed pause. But a stronger than expected April employment report seemed to confirm the Fed’s view that [Read More...]

IN SYNC New and existing home sales have been following a zig-zag pattern (one up and one down) of late, but they fell into lock-step; in March, getting the spring home buying season off to a roaring start. Existing home sales hit a 10-year high in March, reaching an annualized pace of 5.71 million units, percent above the year-ago level. The March surge reversed a February slump that some analysts had viewed as an ominous [Read More...]

EMPLOYMENT REPORT DISAPPOINTS. The employment numbers for March fell below expectations, disappointing many analysts, but they aren’t expected to alter the Federal Reserve’s plan to boost interest rates at least twice and maybe three more times this year. Employers added only 98,000 jobs in March, falling far short of the 200,000-plus mark they had registered in January and February and missing the consensus forecast that called for gains close to that level. Despite the stumble, [Read More...]

INVENTORY WOES Concerns about rising interest rates and shrinking inventories, bubbling beneath the surface of real estate discussions for much of last year, have boiled over, dominating recent news reports and raising questions about the outlook for this year. Existing home sales declined more than expected in February, undercut by a persistent inventory shortage that is limiting choices (especially for entry-level buyers) and increasing prices. The 3.7 percent dip reported by the National Association of [Read More...]

FED ACTS – AS EXPECTED As expected, the Federal Reserve, which has been telegraphing its intention to boost interest rates for several months, did just that following its March meeting, ratcheting the Fed’s benchmark rate up a quarter of a point to a target range of 0.75 percent to 1 percent. Also as expected, Fed officials indicated that additional increases are likely – two more quarter-point hikes this year and three in 2018. The Fed’s [Read More...]

RESILIENT BUYERS Shrinking inventories and rising interest rates continue to worry housing industry executives, but they haven’t deterred home buyers — at least, not so far, this year. Existing home sales increased by 3.3 percent in January compared with the December total. The annualized rate of 5.69 million units was the highest in a decade. Sales of condominiums and cooperatives jumped by more than 8 percent nationally. New home sales also rose by 3.7 percent [Read More...]

MILLENNIAL MINDSET Although most industry surveys continue to indicate that homeownership remains an important part of the American Dream, some analysts have detected what they think may be a sea change in the attitudes of millennials, who have not yet jumped on the housing ladder. Caren Maio, a millennial and a real estate professional, described that change in a recent blog: “In the span of a decade, the American Dream of homeownership has lost a [Read More...]

UNCERTAINTY AHEAD As Donald Trump settles into the Oval Office, the consensus economic forecast is “uncertainty” ─ uncertainty about the policies he will pursue, about the initiatives he will be able to implement, and about the impact they will have on the economy. Stocks and consumer confidence levels have both been riding a post-election bump upward for the past several weeks. Mortgage rates, which had begun to rise before the election, have continued to increase, [Read More...]

PREMATURE ELATION When Steve Mnuchin, President-elect Donald Trump’s nominee for Treasury Secretary, said “getting Fannie Mae and Freddie Mac out of government ownership” would be a top priority, industry executives, who have long-advocated privatization for the two companies, cheered, and the stock of the two GSEs soared. But that exuberance may be both premature and irrational. A recent report by Moody’s Investors Service concludes that the costs and complexity make privatizing Fannie and Freddie unlikely [Read More...]

UNEXPECTED SURGE Overcoming the headwinds created by rising interest rates, higher home prices, and anemic inventories, existing home sales surged unexpectedly in November. The third consecutive monthly increase pushed sales to an annual rate of 5.61 million units, their highest level in nearly 10 years, the National Association of Realtors (NAR) reported. Industry analysts speculated that higher interest rates, and the expectation that they will move higher in response to the Federal Reserve’s less accommodative [Read More...]

OVERTIME DELAYED Employers bracing for a sweeping and (for them) costly change in overtime laws have won a reprieve. A Federal District Court Judge in Texas approved a nationwide injunction sought by state governments and business groups opposing the change, preventing, at least for now, a redefinition that would have made approximately 4 million more workers eligible for overtime pay. President Barak Obama had championed the change in Department of Labor rules as a means [Read More...]

READY, SET….. The Federal Reserve is signaling that a December rate hike is almost certain. As widely expected, the Federal Open Market Committee left rates unchanged at its November meeting, reflecting somewhat more concern than the FBI about interfering in the impending election. But the committee’s post-meeting statement indicated that Fed officials see the moon, and sun, and stars aligning nicely to justify the long-awaited increase in the Fed’s benchmark rate, which has remained unchanged [Read More...]

NEW CONDO FINANCING RULES The Federal Housing Administration (FHA) has proposed new regulations easing some of the requirements condominium associations must meet to make units in the communities eligible for FHA-insured mortgages. Key changes would: Reinstate the “spot approval” process, under which the FHA will insure loans on individual units in associations that have not themselves been certified by the FHA; ease the recertification requirements for condos that have obtained initial certification; potentially reduce the [Read More...]

COOLING OFF The overheated rental market is beginning to cool off. The annual increase in apartment rents fell to 3.1 percent in July – the lowest level in two years, according to Axiometrics, which tracks rental trends. Rents actually gave ground in some of the hottest markets, the company found. “Lower rates of job growth and an abundance of new supply have been causing decreased apartment performance in [major] metros, Jay Denton, senior vice president [Read More...]