Fed Raises Rates 3 Months after Last HIke


The Federal Reserve has raised its benchmark interest rate for the second time in three months and signaled that any further hikes this year will be gradual. The move reflects a consistently solid U.S. economy and will likely mean higher rates on some consumer and business loans.

The Fed's key short-term rate is rising by a quarter-point to a still-low range of 0.75 percent to 1 percent. The central bank said in a statement that a strengthening job market and rising prices had moved it closer to its targets for employment and inflation.

The message the Fed sent Wednesday is that nearly eight years after the Great Recession ended, the economy no longer needs the support of ultra-low borrowing rates and is healthy enough to withstand steadily tighter credit.

The decision was approved on a 9-1 vote, with Neel Kashkari, the head of the Fed's regional bank in Minneapolis, the dissenting vote. The statement said Kashkari preferred to leave rates unchanged.

The Fed's forecast for future hikes, drawn from the views of 17 officials, still projects that it will raise rates three times this year, unchanged from the last forecast in December. But the number of Fed officials who think three rate hikes will be appropriate rose from six to nine.

The central bank's outlook for the economy changed little, with officials expecting economic growth of 2.1 percent this year and next year before slipping to 1.9 percent in 2019. Those forecasts are far below the 4 percent growth that President Donald Trump has said he can produce with his economic program.

In recent weeks, investors had seemed unfazed by the possibility that the Fed would raise rates several times in the coming months. Instead, Wall Street has been sustaining a stock market rally that began with President Donald Trump's election in November, buoyed by the prospect that tax cuts, an easing of regulations and higher spending for infrastructure will accelerate growth.

A robust February jobs report – 235,000 added jobs, solid pay gains and a dip in the unemployment rate to 4.7 percent – added to the perception that the economy appears fundamentally strong.

That the Fed is no longer unsettling investors with the signal of a forthcoming rate increase marks quite a change from the anxiety that prevailed after 2008, when the central bank cut its key rate to a record low and kept it there for seven years. During those years, any slight shift in sentiment about when the Fed might begin raising rates – a step that would lead eventually to higher loan rates for consumers and businesses – was enough to move global markets.

In 2013, then-Chairman Ben Bernanke sent markets into a panic merely by mentioning that the Fed was contemplating slowing the pace of its bond purchases, which it was using then to keep long-term borrowing rates low.

But now, the economy is widely considered sturdy enough to handle modestly higher loan rates. Inflation, which had stayed undesirably low for years, is edging near the 2 percent annual rate that the Fed views as optimal.

And while the broadest gauge of the economy's health – the gross domestic product – remains well below levels associated with a healthy economy, many analysts say they're optimistic that Trump's proposed tax cuts, infrastructure spending increases and deregulation may accelerate growth. Those proposals have lifted the confidence of business executives and offset concerns that investors might otherwise have had about the effects of Fed rate increases.

Yet for the same reason, some caution that if Trump's program fails to survive Congress intact, concerns will arise that the president's plans won't deliver much economic punch. Investors may start to fret about how steadily higher Fed rates will raise the cost of borrowing and slow spending by consumers and businesses.

The Fed typically raises rates to prevent an economy from overheating and inflation from rising too high. But throughout the Fed's history, its efforts to control inflation have sometimes gone too far – slowing borrowing and spending so much as to trigger a recession. Already, the current expansion, which officially began in 2009, is the third-longest in the post-World War II period.

The Fed's benchmark rate, after modest increases in December 2015 and December 2016 and again on Wednesday, is still quite low by historical standards. But if the Fed ends up raising rates three or four times this year and follows up with three additional hikes in 2018, its benchmark rate would be left at a level that might start to dampen economic activity.


Florida Pays Less Taxes Than Residents of 39 States


WalletHub's 2017 Taxpayer Survey and its yearly Tax Rates by State finds Floridians' tax burden from state and local governments fairly reasonable. Overall, Florida ranked 10th for its effective state and local tax rate, meaning only nine other states charge less.

The state was solidly average in real estate taxes – No. 25 out of 50 states – but it ranked No. 8 for total sales and excise taxes. Florida ranked slightly toward the bottom, No. 28, for its vehicle property tax.

The latest WalletHub survey looked closely at taxes as the federal tax deadline approaches. According to respondents, 20 percent of Americans would get a tattoo that said "IRS" if it would allow them to avoid paying taxes in the future; 16 percent would move abroad and 10 percent would stop talking for six months if it would relieve them of their lifetime tax burden


2017 Housing Forecast - Existing Home Sales Up


Frank O'Rourke, Broker attended the 2016 REALTORS® Conference & Expo held this past weekend in Orlando.  While attending the residential housing and economic forecast session it was noted that the market should see more millennials entering their prime homebuying years, rising household formation, and continued job gains boosting overall demand, leading to a slight increase in existing-home sales in 2017.

Lawrence Yun, chief economist of the National Association of Realtors®, presented his 2017 housing and economic forecast and was joined onstage by Dennis Lockhart, president and CEO of the Federal Reserve Bank of Atlanta, who discussed the economic conditions that he believes support what will be a “net positive” for the housing sector.  

Heading into the final months of data for 2016, Yun expects existing-home sales to finish at a pace of about 5.36 million – the best year since 2006 (6.47 million). In 2017, sales are forecast to grow roughly 2 percent to around 5.46 million, and then with a more prominent jump of 4 percent in 2018 (5.68 million). The national median existing-home price is expected to rise to around 4 percent both this year and in 2017.

In front of a packed room of thousands of Realtors® and industry guests, Yun and Lockhart both commented that the housing market this year has been a mixed bag of positives and challenges.   

“The gradually expanding economy, multiple years of steady job creation and mortgage rates under 4 percent all contributed to sizeable interest in buying a home this year,” said Yun. “However, it’s evident that demand and sales slightly weakened over the summer as stubbornly low supply limited buyers’ choices, accelerated price growth and hindered some consumers’ belief that now is a good time to buy a home.”

Lockhart remarked on current inventory levels impacting affordability. Citing limited land availability, shortages in construction labor and tight credit for homebuilders, Lockhart said these factors are contributing to the overall supply shortages for affordable housing.  

Looking to next year, Yun thinks the tight supply and affordability issues affecting buyers in many markets will very slowly but surely start to abate. As housing starts steadily increase, both he and Lockhart are optimistic that housing demand will include leading-edge millennial households finally dipping their toes into the market at a growing rate.

In NAR’s recently released 2016 Profile of Home Buyers and Sellers, the median age of first-time buyers was 321. According to Yun, while repaying student debt, shaky job prospects after the recession and marrying and having children later in life have delayed first-time buyers’ ability and willingness to buy, the wave of potential buyers entering their 30’s is increasing considerably in coming years.

 “NAR surveys from both current renters and recent buyers prove that there’s an overwhelmingly strong desire among the younger generation to own a home of their own,” said Yun. “The housing market over the next couple of years should get a big lift in demand from these new buyers. The one caveat is it’s essential that there’s enough new and existing supply at entry-level prices for them to reach the market.”

Lockhart remarked, “The coming years of housing demand will be millennial-driven and will support the single-family sector.”

Yun anticipates housing starts to jump 5.3 percent next year to 1.22 million. However, this is still under the 1.5 million new homes needed to make up for the shortfall in recent years and keep up with the growing demand. New single-family home sales are likely to total 570,000 this year and rise to around 620,000 in 2017.

“Multi-family housing construction has dominated the building landscape in recent years and only recently started to level off,” said Yun. “Hopefully this is a sign that homebuilders will begin to significantly shift their focus to single-family housing. Both a large bump in new homes and homeowners selling is needed to get supply levels at healthier levels.”

Commenting on the overall health of the U.S. economy, Yun noted that continued overseas instability and flat business investment will lead to an unsatisfactory year of expansion. Although a boost in exports fueled economic growth to just a tick under 3 percent in the third quarter (first estimate), GDP for all of 2016 is still expected to be under 3 percent for the eleventh straight year.

“While the gains have been uneven by state, region and even gender, the 15 million jobs created since 2010 have bolstered consumer spending and housing demand,” said Yun. “Over the next two years, the economy will likely stay on a path of around 2 percent growth with a tightening labor market and stronger inflation.”  

“The pace of job gains has been stronger than economic growth the last two years,” remarked Lockhart. “The housing sector has challenges, but the industry’s near-term outlook is one of continued improvement.”

Yun foresees a gradual uptick in borrowing costs heading into next year. By the end 2017, he expects rates to be around 4.5 percent. Lockhart also anticipates a gradual uptick in rates in the next two years, but said the economy currently does not call for a quickly rising rate environment.

“Increasing mortgages rates have the potential to further dent affordability in markets where supply struggles to recover to more balanced levels,” said Yun. “Despite these likely pressures, the increase in home sales next year will be supported by the continued release of pent-up demand and the beginning of stronger participation from first-time buyers.” 


St. Johns County Has Second Lowest Unemployment Rate In Florida


St. Johns County has seen an increase in its overall workforce in the last year and has experienced an almost equal boost in jobs as the unemployment rate remains low, government data released Friday show.

The monthly release from the Florida Department of Economic Opportunity showed that St. Johns County had the second-lowest unemployment rate in the state during September at 3.7 percent. The was virtually unchanged from August’s rate of 3.6 percent.

It’s also nearly identical to September 2015 when the county posted an unemployment rate of 3.8 percent.

In the last 12 months, the county has seen its total workforce rise to 117,440 — an increase of more than 4,000 since September 2015. And the number of people employed has moved from 108,817 to 113,071 in that period.

The only county with a lower unemployment rate than St. Johns County in September was Monroe County at 3.2 percent. Hendry County had the state’s highest unemployment rate at 11.3 percent.

Overall, Florida’s seasonally adjusted unemployment rate was 4.7 percent in September 2016, unchanged from the August rate, but down 0.4 of a percentage point from a year ago. Rates for individual counties are not seasonally adjusted.

The seasonally adjusted U.S. unemployment rate was 5.0 percent in September.

The number of jobs in Florida was 8,428,000 in September 2016, up 276,300 jobs compared to a year ago. The industry gaining the most jobs was professional and business services (up 59,400 jobs, 4.8 percent). Other industries gaining jobs included leisure and hospitality (up 49,900 jobs, 4.4 percent) as well as education and health services (up 49,700 jobs, 4.1 percent).

The Jacksonville Metropolitan Statistical Area, which includes St. Johns County, had an unemployment rate of 4.6 percent.

Those counties surrounding St. Johns reported relatively low unemployment rates. Clay county had a rate of 4.5 percent, followed by Duval County (4.9), Flagler (5.5) and Putnam (6.1).


Florida Median Home Prices Up in September


Florida's housing market had more new listings, higher median prices and fewer all-cash closed sales in September, according to the latest housing data released by Florida Realtors®.

Tight inventory continues to impact the state's housing market, noted Florida Realtors Chief Economist Brad O'Connor. Closed sales of single-family homes statewide totaled 22,704 last month, slightly down (0.5 percent) from September 2015. Meanwhile, in the townhouse-condo market, statewide closed sales totaled 8,818 last month, down 3.9 percent year-to-year.

"Florida's economy continues to grow, resulting in improving jobs and incomes for workers across the state," says 2016 Florida Realtors President Matey H. Veissi, broker and co-owner of Veissi & Associates in Miami. "In turn, that is generating interest from many would-be buyers who are ready to enter the housing market. However, the latest data shows that a continued lack of inventory – especially in the mid-$200,000-and-under range – is affecting those potential homebuyers, leaving them with limited choices and higher prices as a result."

Home sellers continued to get more of their original asking price at the closing table in September: Sellers of existing single-family homes received 96.2 percent (median percentage) of their original listing price, while those selling townhouse-condo properties received 94.8 percent (median percentage).

The statewide median sales price for single-family existing homes last month was $222,500, up 11.3 percent from the previous year, according to data from Florida Realtors research department in partnership with local Realtor boards/associations. Thestatewide median price for townhouse-condo properties in September was $160,000, up 6.7 percent over the year-ago figure.

In September, statewide median sales prices for both single-family homes and townhouse-condo properties rose year-over-year for the 58th month in a row, Veissi notes. The median is the midpoint: half the homes sold for more, half for less.

Accordingto the National Association of Realtors, thenational median sales price for existing single-family homes in August 2016 was $242,200, up 5.3 percent from the previous yearthe national median existing condo price was $225,100.In California, the statewide median sales price for single-family existing homes in August was $526,580; in Massachusetts, it was $375,000; in Maryland, it was $278,578; and in New York, it was $257,291.

Closed sales data reflected fewer short sales and cash-only sales in September: Short sales for single-family homes declined 33.8 percent year-to-year, while short sales for townhouse-condo properties dropped 27.2 percent. Closed sales may occur from 30- to 90-plus days after sales contracts are written.

"Even though the number of Florida single-family home sales in September was essentially the same as last year, the composition of this year's group was quite different – and in a good way," says Florida Realtors Chief Economist Brad O'Connor. "Distressed sales made up only 10 percent of single family home sales this September, compared to over 19 percent in September 2015. And only 28 percent of sales were all-cash deals this time around, compared to 34 percent last year.

"If our housing markets are going to return to some semblance of what many might term 'normalcy,' it's vital that both of these trends continue."

Similar to previous months, inventory was at a 4.2-months' supply in September for single-family homes and at a 5.8-months' supply for townhouse-condo properties.

According to Freddie Mac, the interest rate for a 30-year fixed-rate mortgage averaged 3.46 percent in September 2016, which was lower than the 3.89 percent average recorded during the same month a year earlier.




FEMA "Individual Assitance" Finally Awarded To Affected Residents


Several days of concern among St. Johns County officials and many residents about whether help would arrive for individuals in the form of emergency funding from the federal government was answered late Monday night. Click here for the link to apply.

With state and local officials clamoring loudly for President Barack Obama to approve the “individual assistance” portion of a federal disaster declaration more than a week after Hurricane Matthew made its run up Florida’s east coast, the Federal Emergency Management Agency approved individual assistance to those in St. Johns County and other areas in Florida impacted by the storm.

Word of the approval came late Monday night from FEMA’s director, W. Craig Fugate, after a day where state and local officials pressured Obama to approve the state’s entire request for a disaster declaration.

“Unfortunately the president has not decided to do a full declaration yet,” Gov. Rick Scott said during a Monday morning news conference at the Castillo de San Marcos, prior to the Monday night announcement.

With individual assistance secured, families whose homes sustained significant damage can now apply for money for temporary housing and to make initial repairs to their properties, according to FEMA spokesman Greg Hughes.

Hughes was in town on Friday following a “preliminary damage assessment team” through St. Augustine. Made up of representatives from FEMA and other agencies, the team was gathering information about impacted homes. Six such teams fanned out across St. Johns County on Friday.

That’s how the process is supposed to work, according to Hughes. Those teams and others are visiting eight counties in the state. All of their information will eventually make it to state officials and then on to the governor’s office, he said.

“There is a process under federal law, and we are following it,” Hughes told The Record on Monday.

But local officials expressed frustration with the process on Monday, saying much of the work they did on Friday ended up having to be redone.

“All of that stuff that we did on Friday, 100 percent of it was rejected by FEMA,” St. Augustine Fire Chief Carlos Aviles said Monday.

Aviles led the FEMA team through the city on Friday.

In a joint phone interview Monday with St. Augustine City Manager John Regan, he said the teams had to pack up and move to Putnam County on Saturday and return here Sunday to redo the work. They finished up Monday morning.

“So Friday was a wash, Saturday was a stand-still, zero day,” Aviles said. “Sunday, finally, we were able to make some progress.”

Hughes couldn’t say what, exactly, was wrong with the information that was rejected Friday.

“We wanted to take another look at certain parts of the city, and that’s why the process took a little bit longer,” he said. “And we have gone back and we have done that now.”

But Regan said prior to the announcement that IA would be available, the entire assessment process was a delay in what he thought would be an inevitable declaration.

“There is plenty of information and evidence, as of last week, to declare an IA,” Regan said Monday afternoon. “So this entire process is putting people like [Chief Aviles] and the FEMA teams through an unnecessary exercise that causes delay in getting services to residents.”

He said as much in an email he sent Friday to Fugate.

In the letter, Regan acknowledged that assessment teams were working in the county, but said that a week after the storm, residents in the city are in “dire conditions.”

“I am asking you to expedite a recommendation to the President for an ‘IA’ declaration for St. Johns County, Florida today,” the letter said.

Another letter, sent Thursday to Gracia Szczech, regional administrator for FEMA Region IV, from Bryan W. Koon, director of the Florida Division of Emergency Management, also made a plea for speeding things along.

That letter said “out-of-the-box” thinking was needed to help expedite the process for securing the individual assistance declaration and suggested that FEMA use its own Draft Individual Assistance Declarations Factors Guidance, that is currently under review.

Under that guidance, evidence already exists to make the declaration for seven counties, according to the letter.

“The State of Florida believes that FEMA should utilize the Hurricane Matthew event as an opportunity to pilot the Proposed IA Guidance, and believes that it has provided relevant data necessary to do so for the seven counties of: Brevard, Clay, Duval, Flagler, Putnam, St. Johns and Volusia.”

In a way, Regan said, northeast Florida may have fallen victim to its own preparedness. With only one shelter in the county operating at the Solomon Calhoun Community Center, it can appear, at least at the national level, that basic human needs were being met, and a rush to the declaration was not needed.

Aviles agreed and credited the community’s response with keeping things from getting worse.

With churches and other organizations stepping up to help, and others just helping friends directly, things on the ground didn’t look as bad as they could.