Legal/Legislative Updates

PANDEMIC CLOUDS Economists are becoming increasingly concerned about the pandemic-clouded economic outlook. Recent employment reports suggest their concerns may be justified. More than 1.1 million workers submitted initial unemployment claims for the week ending August 15 – more than analysts had expected. The previous week’s total was also revised upward to 971,000 from the preliminary estimate of 923,000. “This is not a sign of a healthy labor market,” Carl Tannenbaum, chief economist at Northern Trust, [Read More...]

ECONOMIC RELAPSE Citing evidence that the fledgling economic recovery has stumbled as the coronavirus epidemic has resurged, the Federal Reserve left interest rates unchanged at its July policy meeting. Fed Chairman Jerome Powell doubled down on the Central Bank’s vow to do all within its power to combat what he termed “the biggest shock to the U.S. economy in living memory.” Noting that the ongoing public health crisis “will weigh heavily” on near-term economic activity [Read More...]

RECOVERY SIGNS Housing industry executives who have been looking for signs of recovery got one in June, and a significant one, at that. Pending home sales, which have been trending steadily downward for months, soared, pushing the National Association of Realtors index up by 44.3 percent over the May reading, producing the largest month-over -month increase since the NAR created this index in 2001. The June rebound followed pandemic-induced plunges of 20.8 percent in March [Read More...]

LEGAL FOOTING Companies have been seeking a legal foothold to support their claim that business interruption insurance should cover losses resulting from government-ordered pandemic shutdowns. A recent decision by the Pennsylvania Supreme Court may have provided one. The case wasn’t precisely on point (it didn’t involve an insurance claim), but it did address a key question: Whether the pandemic has caused property damage – a prerequisite for business interruption coverage under most insurance policies. Insurers [Read More...]

PANDEMIC RELIEF Nearly 3 million homeowners have taken advantage of a government pandemic-relief program that allows them to skip for up to a year payments on mortgages purchased by Fannie Mae, Freddie Mac or Ginnie Mae. That represents 5.5 percent of all outstanding mortgages, totaling $651 billion in principal payment, Black Knight, a mortgage data analytics company, estimates. Loan servicers have been sounding alarm bells since the program was announced, noting that servicers must still [Read More...]

A LITTLE GOOD NEWS We’re going to start with some good news, because there isn’t much of it. Existing home sales increased by more than 7 percent year-over year in February, posting the highest annual rate (5.77 million units) in 13 years. New home sales increased by more than 14 percent, year-over-year. That’s it for the good news, and it is tempered considerably by the time frame; These upbeat stats are based on sales that [Read More...]

OWNERSHIP LAGGING What’s up with the home ownership rate? More precisely, why isn’t it up? After sinking in the aftermath of the “Great Recession,” the rate rebounded from the low point of 62.9 percent four years ago, to 65.1 percent in the fourth quarter of last year, according to a Census Department report. But it’s been stuck near that level since the fourth quarter of 2018, despite favorable interest rates and solid employment growth. Part [Read More...]

FEELING BETTER Consumers are feeling better about the housing market, and the housing market appears to be feeling better about itself. Fannie Mae’s Home Purchase Sentiment Index (HPSI) remained near an all-time high in December, propelled by a 16 percent year-over-year increase in the number of respondents declaring this a good time to buy a home. Sellers are also upbeat. “Good time to sell” responses increased by 7 points in this survey. “The continued strength [Read More...]

EMPLOYMENT RAVES Analysts reached for superlatives – “blowout” and “blockbuster” among them ─ to describe November’s surprisingly strong employment report. Employers added 266,000 workers to their payrolls, blowing well past the 187,000 economists had predicted. October’s anemic 128,000 gain was revised upward slightly, to 156,000, and the unemployment rate remained unchanged at 3.5 percent. Average hourly earnings increased by 7 cents – a 3.1 percent year-over-year gain. The strong employment report replaced suspicions that a [Read More...]

DISPARATE IMPACT Congressional Democrats and housing advocacy groups say a proposed revision in the Fair Housing Act’s “disparate impact” standard would undermine policies designed to combat housing discrimination. The change, proposed by the Department of Housing and Urban Development (HUD), targets a legal theory under which a practice may be deemed discriminatory if it has a discriminatory impact on a protected class, even if the discrimination is not intentional. The revised standard would replace the [Read More...]

UNDER-PERFORMING The housing market continues to under-perform, producing results weaker than strong employment figures and wage gains would seem to support. Skimpy inventories pushed prices up and pushed existing home sales down in September compared with the previous month. But the seasonally adjusted annual rate of 5.38 million units was almost 4 percent above the year-ago level. “An unbalanced situation” created by rising prices and shrinking inventories is holding sales below expectations, Lawrence Yun, chief [Read More...]

FED ACTION Citing concerns about the impact of the trade war with China and the increasing risk of a global economic downturn, the Federal Reserve slashed interest rates for the second time this year, reducing the benchmark overnight lending rate by 25 basis points, to a range of 1.75 percent to 2 percent. In a press conference following the announcement by the Federal Open Market Committee (FOMC), the Fed’s policy-setting arm, Fed Chairman Jerome Powell [Read More...]

FHA CONDO RULES The Federal Housing Administration (FHA) has approved a final rule easing access to FHA-insured mortgages for condominiums, incorporating many of the changes for which the Community Associations Institute (CAI) has been lobbying for years. The policy changes could result in the financing of an additional 60,000 condominium loans every year, according to HUD estimates. Among the key changes, the revised rule: Reinstates the “spot approval” process. FHA will now insure loans on [Read More...]

STILL FALLING Existing home sales declined again in June – falling 2.2 percent below the year-ago pace, despite lower interest rates and wage gains fueled by a strong labor market. New home sales recovered from a dismal May, primarily because strong sales in the West offset weakness in other regions, pushing the national total 7 percent above the June 2018 level. Industry executives found nothing reassuring to say about existing home sales, which have now [Read More...]

A SURE THING? Within the space of a week, interest rate speculation has veered from a consensus that the Fed would cut rates, to a widely shared belief that they would not, and back to virtual certainty that the Federal Open Market Committee (FOMC), the Fed’s policy-making arm, will cut rates when it meets at the end of July. Growing concern that the economic recovery is weakening, the strongest argument in favor of a rate [Read More...]

WILL THEY OR WON’T THEY? The ‘they’ is the Federal Reserve and the question is whether the policy-setting Federal Open Market Committee (FOMC) will lower interest rates when it meets next in late July. The committee voted 9-1 in June to leave rates unchanged, but a post-meeting statement, eliminating previous references to “patience,” signaled a willingness to consider a rate cut, though probably not before next year. The statement also downgraded the committee’s assessment of [Read More...]

CONDO COOLING Boston’s sizzling condominium market is cooling off. Sales reported for April were 4 percent below the total for the same month last year, the Greater Boston Association of Realtors reported, while the number of units listed for sale increased by 15.3 percent compared with the prior month – the 18th consecutive monthly increase. Separately, the Warren Group reported that condo sales increased by 1.3 percent statewide, but the median price recorded its third [Read More...]

STILL DISAPPOINTING Housing industry analysts continue to insist that the spring housing market will strengthen, but as spring gives way to summer, home sales continue to disappoint. Existing home sales fell again in April, slipping slightly below the March total and falling 4.4 percent below the same month a year ago ─ the 14th consecutive year-over-year decline. Economists were predicting that lower mortgage rates and a strong labor market would produce significantly better results. Lawrence [Read More...]

PARTIAL BAN A federal district judge has temporarily blocked enforcement of two components of a Boston ordinance regulating short-term rentals in the city. The ordinance, approved by the City Council last year, would have required on-line platforms to ensure that listed properties comply with registration rules and to report detailed information about their listings. Airbnb challenged the ordinance, contending that it illegally required listing companies to disclose proprietary business information and imposed unreasonable monitoring requirements [Read More...]

INCONSISTENT If you’re looking for consistency, you won’t find it in the March housing market reports. After posting the strongest performance in almost four years in February, existing home sales reversed direction in March with a 5.4 percent year-over year decline. The February jump had provided hope that home sales might be regaining their footing after back-to-back declines in December and January; the March swoon dented those hopes, but new home sales restored them, posting [Read More...]

RENT CONTROL REDUX Rent control has returned ─as part of the housing policy discussion, if not, as yet, a component of housing policy. Boston City Councilor Althea Garrison has introduced a home rule measure that would restore rent control in the city – two decades after a voter referendum abolished the policy statewide. A recent study cited by the Boston Globe ranked Boston rents the fourth highest in the country, averaging $2,400 for a one-bedroom [Read More...]

RATE SURPRISE Surprising just about everyone, the Federal Reserve left interest rates unchanged in March and, more surprising still, indicated that policy makers aren’t planning any rate hikes for the remainder of this year, with only one increase likely in 2020. Opting to extend the “patience” that kept rates unchanged in January, the Fed’s Federal Open Market Committee (FOMC) voted unanimously to alter a policy course that had been pointing firmly in the direction of [Read More...]

THE BATTLE CONTINUES The Jersey Shore is the latest battleground in the ongoing conflict between government officials and the short-term vacation rental industry represented by Airbnb. An 11.6 percent tax on these rentals that took effect in October of last year has provoked an outcry from New Jersey homeowners who say they are having trouble finding renters because of the higher rents they must charge to cover the tax. Critics say the tax will be [Read More...]

HOMELESSNESS PERSISTS Although efforts to reduce homelessness have had some success over the past two decades, they have fallen well short of eliminating the problem. The Department of Housing and Urban Development (HUD) reports that 552,800 Americans experienced homelessness last year, an increase of 0.3 percent over the previous year’s total. This is the second consecutive year the numbers have trended upward, reversing gains that have reduced homelessness overall by 13 percent since 2010. The [Read More...]

PATIENCE IS A VIRTUE – AND A FED POLICY “Patience” was the byword for the Federal Reserve (Fed) in January, driving a unanimous decision by the policy-making Federal Open Market Committee (FOMC) to stand pat on interest rates for now, and producing a decidedly less hawkish tone in the statement released after the committee’s meeting. “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines [Read More...]

THEY’RE BACK! Unconventional loans are back. Offered to borrowers who can’t document their income through traditional means, because they are self- employed, for example, the loans were wildly popular during the ‘anything goes’ days preceding the 2007-2009 financial meltdown, when they were known as low-doc, no-doc or (more disparagingly) “liar loans.” A slowing home sales and rising interest rates are renewing their popularity today, as lenders seek to gain or preserve market share in a [Read More...]

SHUTDOWN PAINS Some industry executives say the prolonged government shutdown isn’t hurting the housing market – yet. But it’s not helping either. Three-quarters of the approximately 2,200 real estate brokers responding to a National Association of Realtors survey said the shutdown has had no significant impact on current housing transactions. Only 11 percent said their clients have experienced closing delays related to the shutdown, while another 11 percent said the shutdown has affected the purchase [Read More...]

STAYING THE COURSE Downplaying concerns about stock market turbulence and ignoring angry tweets from the White House, the Federal Reserve raised its benchmark interest rate in December for the fourth time in 2018. “Information received since the Federal Open Market Committee (FOMC) met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate,” the committee said in a statement after its December meeting. [Read More...]

FIX FOR CONSTRUCTION DEFECT SUITS The Massachusetts House of Representatives has approved legislation that would remove impediments limiting the ability of condominium association to pursue construction defect claims against developers. Under the existing legal framework, a suit must be filed within three years of when defects are discovered (statute of limitations) or within 6 years after substantial completion of the development (statute of repose), regardless of when the problems are identified. Under that structure, developers [Read More...]

BETTER BUT NOT GOOD It looked like good news, but it wasn’t, particularly. Existing home sales in October eked out a 1.4 percent increase over the prior month, breaking what had been six consecutive monthly declines. But October sales fell 5.1 percent below the year-ago pace, posting the largest annual decline in four years, and fueling growing concern that the housing market’s woes may be deepening. Lawrence Yun, chief economist for the National Association of [Read More...]