In this week’s Real Estate News in Brief… who’s paying more in property taxes, a warning about a fake bank, and a court ruling for the homeless.
We begin with economic news from this past week.
The latest update on inflation shows a 0.4% increase in the consumer price index. That was mostly due to higher gas prices and rent. When you remove gas and food prices, which are both volatile, you get the Core CPI which was 0.1% higher. Those price bumps raised the 12-month rate of inflation to 2.1%.
Consumers are showing a little less confidence about the economy. The University of Michigan consumer sentiment index fell about two points in April — from about 98 to 96. Researchers say they are concerned about higher prices for homes, cars, and trucks, but are happy about an overall increase in their paychecks.
Long-term interest rates are up slightly. Freddie Mac says the average 30-year fixed-rate mortgage rose 4 basis points to 4.12%. (1) That shouldn’t be a cause for concern. Freddie Mac says that mortgage rates are expected to remain on the low side for the foreseeable future.
In other news making headlines…
President Trump Pushes for Rate Drop
President Trump is pushing the Federal Reserve to cut short-term interest rates. He made his comments to reporters, saying that monetary policy by the central bank is to blame for the sluggish economy. He also called for the return of Quantitative Easing which is the purchase of bonds by the federal government to improve market liquidity. It also keeps interest rates low. The Fed did that in the midst of the recession to give the economy a boost.
The Federal Reserve operates independently of the federal government so Trump’s comments are not expected to determine central bank policy. One of the big reasons the Fed is not raising interest rates is due to the lack of inflation. Fed Chief Jerome Powell says there’s no easy answer to explain why prices haven’t moved higher as the economy continues to grow. The President apparently feels that by lowering the rates, the economy will move at a faster clip. That might also push prices higher. Many economists believe the Fed will keep interest rates right where they are through next year.
Property Taxes Moving Higher
Consumers are not only paying more for their single-family homes. They are also getting bigger bills for their property taxes. ATTOM Data Solutions says that homeowners paid about 3% more in 2018 than they did the year before. The average effective annual tax rate for the nation was 1.16%. That’s a slightly lower percentage than 2017, but higher home prices are driving those property taxes bills higher.
The state with the highest property tax is New Jersey at 2.25%. Several states in the northeast and central states are also close to that level. The state with the lowest tax rate is, surprisingly, Hawaii, at just .37%. Alabama is second, followed by Colorado, Nevada, and Utah. West Virginia is also at the lower end of the spectrum, along with Arizona, Tennessee, and Wyoming. (2)
Warning about Fake Bank
Federal officials are warning people about a fake bank operating out of Minnesota. (3) The Office of the Comptroller of the Currency issued a notice on April 4th, saying that the First National Bank of Minneapolis doesn’t exist. The OCC says it’s neither licensed or chartered and is totally fictitious.
HousingWire reports that businesses had received fake letters and faxes that offered various kinds of loans and lines of credit. One example provided by the OCC included a letter saying that the business had pre-qualified for a $60,000 loan. It also promised up to $350,000 in unsecured revolving credit with funding in as little as three days. Victims should contact federal authorities.
Court Ruling on Homelessness
A new court ruling will prevent cities from ticketing or arresting people who are homeless. The Ninth Circuit Court of Appeals in San Francisco says that camping or sleeping in public places is not a crime unless the city has provided adequate accommodations for those who need it. The ruling is the result of a lawsuit out of Boise, Idaho, which challenged local ordinances about sleeping in public.
ACLU Advocate, Eva Garrow, commented in Realtor.com that It’s a very important ruling. She says, “These enforcement actions punished people for unavoidable behavior… They treat those who are poor as criminals, and create fear and mistrust of those experiencing homelessness.” Curbed.com reports that many cities, such as San Francisco and Sacramento have already stopped enforcing rules that ban sidewalk sleeping after a prior ruling in the case, last September.
(1) Mortgage Rates
(2) Increasing Property Taxes: ATTOM Data Solutions
(3) Fake Bank