Legal/Legislative Updates

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...]

SHORT-TERM RENTAL BATTLE Airbnb, a leading platform for promoting short-term vacation rentals, is challenging a Boston ordinance that would restrict the ability of property owners to rent their residences for short period. Scheduled to take effect January 1 of 2019, the rules require owners to register their short-term rental properties, allow them to list only one unit at a time on host platforms like Airbnb, prohibit investors and tenants from using the platforms (but allow [Read More...]

HOUSING MARKET FALLING DOWN After several months of declining home sales, analysts have begun using the f-word ─ falling ─ to describe the housing market’s trajectory. “The housing market is stumbling through its longest slump in four years, as the divergence between a booming U.S. economy and weakening home sales that many had dismissed as temporary now looks poised to continue,” the Wall Street Journal reported. A combination of rising mortgage rates, relentless home price [Read More...]

NOT HEALTHY Despite some recent, small gains, the inventory of available homes for sale remains sparse. The 4.3-month supply reported in October “is far from a healthy level,” the NAR’s chief economist, Lawrence Yun, observed. Inventory levels aren’t the only indicator signaling problems ahead for the housing market: Mortgage rates have reached an average of 4.97 percent, their highest level in seven years, approaching the 5 percent mark that some analysts view as a psychological, [Read More...]

STEPPING UP Citing continuing job gains, a low unemployment rate and strong spending by businesses and consumers, the Federal Reserve increased interest rates for the third time this year, pushing its target rate up by another quarter-of a point to 2.25 percent. The unanimous vote by the Federal Open Market Committee (FOMC), the Fed’s policy-making arm, indicated that the board remains on its current course, which calls for gradually increasing rates to prevent a growing [Read More...]

TRYING AGAIN Lawmakers, who have been talking about housing finance reform for years, are talking about it once again. With the 10-year anniversary of the conservatorship for Fannie Mae and Freddie Mac now logged, Rep. Jeb Hensarling, chairman of the House Financial Services Committee, has introduced two measures that would reduce the GSEs’ dominance, giving private capital a larger role in financing home mortgages. One of the measures is a refile of a bill Hensarling [Read More...]

IN AND OUT Fannie Mae and Freddie Mac thought they might play a constructive role in the single-family rental market. A test program has led the Federal Housing Finance Agency, which regulates the two Government Sponsored Enterprises (GSEs), to conclude otherwise. “What we learned as a result of the pilots is that the larger single-family rental investor market continues to perform successfully without the liquidity provided by the Enterprises,” FHFA Director Mel Watt said in [Read More...]

HOUSING UNCERTAINTY What has been a quiet hum of concern about the housing market has grown louder, echoing in the comments of industry analysts and in headlines such as these: “Home Buyer Demand Cools Off”; “Housing Market Showing Signs of Cracking”; “Is the High-Flying Housing Market Heading for a Fall?” Economic reports for June indicate that some key trend lines have begun to shift. Home buyer confidence, housing demand, sales of new and existing homes, [Read More...]

CRACKS IN THE FOUNDATION? In the face of rising prices and shrinking inventories, housing demand has remained steady, providing a cornerstone underpinning the housing recovery. But there are signs that cornerstone may be weakening. Bidding wars are becoming less common, days on market are increasing even in the hottest markets, the pace of new construction is slipping, sales of new and existing homes are declining, surveys find fewer prospective buyers think this is a good [Read More...]

FANNIE EASING Fannie Mae is making it easier to finance investment condominiums. The agency announced recently that it will allow “limited reviews” of condominium properties instead of insisting on more detailed and costlier full reviews required for these loans. Fannie has been allowing limited reviews for loans on owner-occupied condos with down payments of at least 10 percent, but has insisted on full reviews for investment condos, regardless of the down payment size. The new [Read More...]

CLIMATE CHANGING THE HOUSING MARKET Climate change is reshaping the housing market. A recent study by Attom Data Solutions finds that consumers are beginning to factor concerns about flooding, wildfires and other climate-related disasters into their decisions about where to live, and those assumptions are beginning to affect home values in some areas. According to the study, home values in areas with high exposure to floods and hurricanes declined on average between 2007 and 2017. [Read More...]

MARIJUANA MOVEMENT In the continuing tug-of-war between state and federal lawmakers over legalization of marijuana, it appears the states may have gained an edge. President Donald Trump indicated recently that he might support a bipartisan Congressional measure establishing as a matter of law that states have the authority to determine how to regulate marijuana within their borders. The proposal would negate moves by Attorney General Jeff Sessions to revoke an Obama-era policy, under which the [Read More...]

CONDO CYBER THREATS Although condominium association boards are becoming more aware of cyber-threats, cyber-security has not become a top priority for most, according to a survey conducted by the Foundation for Community Association Research (FCAR). Less than half (about 40 percent) of the board members and 46 percent of the managers responding to the survey rated their concern about cybersecurity threats as “strong” or “very strong.” The issue registers more powerfully with association attorneys (53 [Read More...]