Federal Reserve cuts interest rate, signals pause

The Fed’s benchmark rate is now set in a range of 1.5% to 1.75%.

The Federal Reserve cut its benchmark rate by a quarter of a percentage on Wednesday in a bid to keep the decade-long U.S. 

economic expansion going while signaling it likely was done, for now.

It was the Fed’s third consecutive quarter-point cut as the central bank tries to bolster the economy while preserving ammunition that would be needed if the nation sinks into a recession.

The FOMC post-meeting statement dropped its prior pledge to “act as appropriate to sustain the expansion.” Instead, the committee promised to monitor data as it “assesses the appropriate path of the target range.” 

The Fed’s benchmark rate is now set in a range of 1.5% to 1.75%.

At the press conference following the decision, Fed Chairman Jerome Powell pointed to an economy growing at a moderate pace and unemployment near five-decade lows. While he cited some troubling signs, such as a manufacturing slowdown, he said it wasn’t enough to sway the “positive outlook” of the rate-setting Federal Open Market Committee.

“After cuts at the last three meetings, we feel that policy is well-position to support the outlook that I described,” he said. “We’re going to be watching all factors and if developments emerge that cause a material reassessment with that outlook, we would respond accordingly, but that’s what it would take: a material reassessment of our outlook.”

U.S. economic growth probably will slow to 2.1% in 2020, which would be the weakest pace since 2016, from 2.4% this year, the International Monetary Fund said in an Oct. 15 forecast. In 2018, the expansion rate hit a three-year high of 2.9% as changes to the federal tax rate that favored businesses provided a temporary boost.

In the last question of the press conference, a reporter asked Powell to comment on President Donald Trump’s tweet earlier in the day that simply said: “The Greatest Economy in American History!”

The president has been notably absent in the run-up to the Fed meeting. Before other meetings this year he tweeted multiple insults aimed at Powell and sometimes at the entire board, calling them “boneheads” and “clueless.”

This go-round, there was just one negative tweet, sent last week: “The Federal Reserve is derelict in its duties if it doesn’t lower the Rate and even, ideally, stimulate.”

Rather than responding to the president, Powell sidestepped the question.

“I’m going to maintain my longtime practice on not commenting on what any elected official might say,” Powell said before leaving the podium.

Courtesy of HousingWire newsletter.

Breckenridge to host public meetings about rehabilitation of Goose Pasture Tarn Dam

#Breckenridge #Colorado

The town of Breckenridge will host two public meetings in November to discuss the rehabilitation of Goose Pasture Tarn Dam, which is on the Blue River about two miles south of Breckenridge. 

The planned rehabilitation includes replacing the two existing spillways with a single, larger spillway. This replacement is meant to improve the safety and sustained operation of the dam. Work is planned to start in May 2020 and be completed by fall 2022. Funding is expected to be provided by the Federal Emergency Management Agency, the state of Colorado and the town of Breckenridge. 

The first meeting will be held from 6-8 p.m. Thursday, Nov. 7, and is meant to inform residents in the surrounding area about the details of the rehabilitation project, including the construction schedule and changes in reservoir operating levels. Members of the town of Breckenridge, the rehabilitation design team and Colorado Dam Safety will be present at the meeting to answer questions from attendees.

On Thursday, Nov. 14, a second meeting will be held from 6-8 p.m. to address downstream safety concerns for Breckenridge residents and to recap the details described at the first meeting. Members of the town of Breckenridge, Summit County, the rehabilitation team and Colorado Dam Safety will be available at the second meeting to answer questions.  

Public comment will be accepted at both meetings.

Courtesy Summit Daily.

Late summer lodging tax revenue up across most of Summit County; winter bookings up across mountain west

Lodging revenue is slightly ahead of last year across the mountain west, according to Inntopia’s latest DestiMetrics market briefing. The combination of a 0.8% increase in occupancy and a 2.7% increase in average daily rate resulted in a 2.6% revenue increase for lodging properties in September compared with the same month in 2018. 

The overall increase is modest, but in Summit County, Dillon and Silverthorne saw larger increases late this summer. In August, Silverthorne’s lodging tax revenue was up 14.8% while Dillon’s was up 22% compared with the same month last year. 

Silverthorne Revenue Administrator Jackie Balyeat said the increase is partially due to a large tax payment made by a lodging property that hadn’t paid the tax for several years. But the revenue is largely from short-term rental properties filing correct lodging taxes. 

While larger hotels and motels are looking fairly flat in their revenue, Balyeat said, there have been a lot more short-term rental owners who have registered recently and are fulfilling the short-term rental lodging tax requirement. 

“A lot of it is educating taxpayers, making sure people understand that they need to file and showing them how to do it,” Balyeat said. 

That’s easier now that Airbnb collects taxes on behalf of hosts rather than the hosts being tax collectors themselves. 

Dillon Finance Director Carri McDonnell agreed with Balyeat’s assumption that increased compliance among short-term rental tax filings are what have created the increase in lodging tax revenue. 

An “increase in education through the new licensing regulations have increased compliance,” McDonnell wrote in an email.

The LIV Sotheby’s International Realty commercial snapshot reported that Breckenridge’s 2019 lodging revenue through August is ahead of 2018 by 4.9%. The official sales tax report put out by the town of Breckenridge also showed a 3.2% increase for August compared with the same month in 2018 after two months of decreases. 

Frisco was the only town with a decline in lodging tax revenue for the month of August, down 9.3% compared with August 2018. Year-to-date tax revenue is up 3.24%.

Frisco Revenue Specialist Kelsey Moorhouse said the modest year-to-date growth is not necessarily statistically significant. She pointed out that while the late winter snow was helpful for skier visits, the snow that persisted into the summer recreation months brought lodging revenue down.

Winter bookings up

Looking ahead to winter, a solid snow season is always a major factor in lodging revenue. In March, Breckenridge generated the most short-term lodging tax revenue it had in two years, $36.86 million, because of record-breaking snowfall that month.

The current winter booking pace across the mountain west is slightly ahead of the 2018-19 season. As of Sept. 30, Inntopia reported occupancy for November through March is up 0.4% compared with the same time last year. Year-over-year occupancy is up 6.6% in December but down 3.6% in November and February. The average daily rate for November through March is up 3.8% and is projected to increase revenue by 4.2%, according to the report.

Inntopia Senior Vice President of Business Operations and Analytics Tom Foley said the data is based on a relatively low volume of bookings and is subject to change along with the weather.

So far, the snow is piling up in Summit County, with ski areas anticipating breaking their October snowfall records by the time the next storm rolls out of the area Wednesday.

Courtesy Summit Daily.

Luxury home sales are up — and Summit County has lots of real estate ready to be sold

#Summit County #Colorado

 With a record number of building permits issued in Summit County, up 10% from last year for the Summit County Building Inspection Department alone, real estate is looking pretty optimistic as well. While the total number of real estate sales are down about 12%, volume of sales and luxury homes sold are up.   
 

Even though we were down in September by 25 sales we went up in value,” Thomas Coolidge, president of the Summit Association of Realtors, said. “It’s an interesting data point about Summit County. It’s just such a strong market that people want to be here.”

Coolidge shared that the days on market for a home being sold right now in Summit County is historically low 

“If properties are priced right they’re literally going under contract in a week,” Coolidge said.

While total sales are down, Coolidge said there are currently a whopping 452 pending units, meaning there are 452 units that are under contract but are just waiting to close. According to Coolidge, about 350 of these units that are pending are under the normal real estate process and are very likely to close within 30–45 days. The remaining units may be a bit more complicated and could take longer to close, but have a deal in the works. 

“It’s just so exciting that these would go under contract so quickly,” Coolidge said. “That is really, really healthy.”

Additionally, Coolidge said that about 293 of these pending units are priced between $300,000 and $900,000 while the other 159 are considered luxury homes at or above $1 million. Luxury home sales were also up by over 23% for the month of September this year compared to last year. 

“The reality is that because of the supply and demand the prices are going up,” Coolidge said. “It’s a function of the fact that our market is healthy.” 

Since this month’s snapshot doesn’t show all of the homes that are just yet to close, Coolidge expects numbers in the next coming months that are similar if not higher. 

“I’m expecting October, November, December to show the same kind of stuff,” Coolidge said. “As these new projects get ready to close, it’s going to really be an amazing start to the next year.” 

Despite the dip in real estate sales in July, Summit County has seen steady growth in overall real estate market health through August and September, and with Coolidge’s optimistic view, the trend will likely continue.

Courtesy Summit Daily.

Capital Economics: Home price growth is holding steady

In August, Capital Economics predicted an increase in home prices due to low mortgage rates. The August report predicted a 3% increase in home price growth.

And now, the economic research consultancy is doubling down on that rate projection, despite other indicators pointing to an acceleration.

Capital Economics’ report this week cited plenty of data that could lead to a projected acceleration in home price growth of around 5% by the end of 2019.

“Some leading indicators of house price growth are pointing to an acceleration,” the report states. “For example, the average size of mortgages approved for home purchase was up 6% year over year in September. 

That’s the fastest pace since the end of 2015, and points to house price growth rising to 5% over the next six months.”

But Capital Economics warns using those figures as an indicator could be misleading. The report states that a rise in mortgage approval size could mean a larger share of more expensive homes being sold, rather than a rise in average house prices.

The report also points to low inventory as an indicator that prices could accelerate. And while that may be enough to fuel the 3% price growth Capital Economics is projecting, its economists argue that the slowing economy won’t push that percentage any higher. 

“With the economy slowing, we are not convinced house price growth will take-off,” the report states. “Buyers will become increasingly cautious about how much they are prepared to pay for a home, and lenders will curb how much they are willing to lend.”

“Indeed, homebuyer sentiment has stayed stubbornly low even as interest rates have hit a three-year trough, and house price expectations on the NY Fed measure have dropped to six-year lows,” the report concludes. “Given that, we are sticking to our view that growth will stabilize at 3% year over year this year, before slowing to no change in 2020.”

Courtesy HousingWire newsletter.

Boston’s ban on Airbnb investor units eases housing shortage

Sheila Dillon, Boston’s housing chief and director of neighborhood development, said she expects a flood of apartments will hit the market in December when the city’s ban on investor units being used as short-term rentals goes into effect.

“We’re hoping that the units returning to the market will be in the thousands,” Dillon told the Boston Herald this week.

Boston last year banned the use of investor units for short-term rentals via Airbnb and other websites. In November 2018, Airbnb sued Boston in federal court over what it called “draconian” regulations.

 The company settled the suit in August by agreeing to add a function to its website that asks hosts to enter a city-issued registration number starting Sept. 1. Hosts that don’t provide the number by Dec. 1 will be blocked.

Dillon said an earlier estimate from Airbnb put the number of investor units – measured as units that are rented for most of the year, implying the owners don’t live there – at about 3,000. That’s about half of their listings for the city, the Boston Herald said.

Earlier this year Zillow cited Boston as one of the U.S. cities where the housing shortage has reached a crisis level. A shortage of housing units has been one factor driving both rents and home sale prices to levels that are more than double national averages.

“We’re hoping that more units coming on the market will increase the vacancy rate and units will continue to moderate,” Dillon told the Herald this week. “If we’re building additional housing to influence the rental cost, we need the units that were built to be residential units built to serve full-time residents.”

The average rent in Boston was $3,505 in September, more than double the national average, according to RentCafe. About half the city’s housing units are rentals and half are owner-occupied.

The median sale price of a Boston home was $650,400 in August, according to Zillow. That compares with a U.S. median price of $237,000.

Courtesy of HousingWire newsletter.

Fed increases liquidity in financial markets

The Federal Reserve will now be increasing its liquidity injections in the overnight lending markets.

Instead of its current $75 billion, repo operation offerings will increase to $120 billion as the central bank works to keep markets operating within its target range, according to an article by Jeff Cox for CNBC.

The New York Fed announced the increased liquidity offering, but did not elaborate on its reasons for the increase, the article states.

From the article:

“It’s just more evidence the Fed will not back off as year-end gets closer,” said Mike Schumacher, global head of rate strategy at Wells Fargo Securities. “The Fed wants to take out more insurance. You had repo pick up last week. That might not have gone over too well.”

A mid-September cash crunch in the repo, or repurchase, market led the Fed to conduct a series of repo and term repo operations to make sure that banks have the overnight funding they need at rates within the central bank’s intended parameters.

Back in September, repurchase agreement rates spiked from about 2% to more than 10% as some borrowers were pressured by corporate tax payments and settlements of the newly actioned U.S. Treasuries.

This raised concerns for the housing market as these rates have been considered as replacements for the London Interbank Offered Rate, which is set to expire in 2021.

LIBOR, dubbed the world’s most important number, is a scandal-plagued benchmark that undergirds about $350 trillion in loans. LIBOR is a common benchmark for determining short-term interest rates. Adjustable rate mortgages, for example, are often linked to LIBOR.

When borrowers take out an ARM on their home, they lock in a lower interest rate for a set period of time, typically about five years. After that, the interest rate will fluctuate depending on an index like LIBOR.

New options are being presented as replacements, and many think the Federal Reserve Bank of New York’s SOFR may have the best bet of becoming its replacement.

Courtesy HousingWire newsletter.

Parking, traffic concerns raised as Summit County commissioners approve One River Run hotel development exemptions

#Keystone #Colorado

At a contentious Summit Board of County Commissioners meeting Tuesday, officials approved two exemptions requested by One River Run Acquisitions, the developer of a proposed hotel at the former Keystone Resort Hunki Dori parking lot site.

The proposed project features a 107-room RockResorts hotel and would include a spa, restaurant and banquet space that would be managed by Vail Resorts’ hospitality division. The project also includes about 95 residential condos and 12,000 feet of commercial space.

At Tuesday’s meeting, county commissioners approved an amendment to convert the originally planned multifamily units to lodging units and approved an exemption that requested a portion of the parcel be carved out for River Run Gondola. 

These requests initially were brought to the board at its Oct. 8 meeting, but after three hours of deliberation, commissioners asked the developers to gather additional information before the board would make a decision.

At Tuesday’s meeting, Summit County senior planner Dan Osborn presented some of the requested materials, including showing that the proposed hotel falls within the River Run Village boundary, and explaining the trails and parking plans. The trail plan showed paths would be built around the project so people can access the gondola. 

Commissioner Thomas Davidson questioned whether the paths would be accessible to pedestrians or if they would be full of people waiting to get into the River Run Gondola. 

Concerns also were raised at the Oct. 8 meeting about whether Keystone had met the requirements of its planned unit development, which includes an annual parking study.

“We do feel that they have met that requirement,” Osborn said. “In an ideal world, there would be more parking out there.”  

Davidson asked what would happen if Keystone breaches its requirements.

“At this point, we have not commenced any enforcement on compliance,” Summit County attorney Jeffrey Huntley said. 

Davidson said he was concerned about Hunki Dori Court becoming a “traffic jam” with skier drop-off, adversely affecting neighboring communities. He asked for some sort of written agreement to give the county the authority to address this potential issue if “all else fails.”

“It seems like what we need to do is issue a (planned unit development) amendment to look at all of these global parking and traffic issues,” Commissioner Karn Stiegelmeier said.

Elena Scott, an architect for the developer, said there would be valet parking to make parking more efficient in the hotel garage, which includes 184 spaces primarily for hotel and restaurant customers and does not allow skier parking. Scott said the hotel operator would be requesting one car per hotel reservation.

Stiegelmeier said she would like to see those plans added to the development permit.

Osborn said the valet plan is a condition of the planned unit development, and that they would look at adding it to the site plan. He also said the county document requires employee parking. 

“I want to make sure that the employees working here, if at some point this project is not operated by Vail Resorts or a subsidiary of Vail Resorts, still have a legal place to park,” Davidson said.

The Hunki Dori lot previously held 179 public parking spaces that now will be moved to the Powerline parking lot, where Keystone Resort will increase capacity by 270 spaces as part of its agreement with the county.

Courtesy Summit Daily.