On Banking:

I bank with Signature Bank and when the news broke on Sunday night March 12th that they “failed”, I was a little unnerved to say the least, along with many other friends and clients. I ultimately ended up not changing banks (but did open accounts at other institutions) and am now a customer of Flagstar Bank, who is owned by New York Community Bancorp, that purchased the bank seven days later. The fact that on Monday morning, the FED backstopped facilities and guaranteed ALL funds calmed me, and the markets as a whole. As the Federal Reserve stated: The U.S. banking system remains resilient and on a solid foundation.

On Interest Rates:

There really should not be uncertainty. If you listen to Fed Chair Powell’s last speech on March 22, where they raised the rate by a quarter percent, he stated “Recent indicators point to modest growth in spending and production. Job gains have picked up in recent months and are running at a robust pace; the unemployment rate has remained low. Inflation remains elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run….The Committee is strongly committed to returning inflation to its 2 percent objective.” We are currently at a 6.04% inflation rate, trending down from 9.1% from June of last year, but still a ways to go.

My own prediction is that we will see three (3) more quarter percent rate hikes (May 3rd, June 14th and July 26th) bringing the fed funds rate to 5.75% before pausing.

On The NYS Budget & 421-a:

The deadline for the budget came and went and they voted on 4/3 to extend the deadline to Monday April 10th. In politics a lot can happen during last minute negotiations, but I do not foresee a new 421-a replacement in this budget. As always, I will keep you posted if that changes.

On the Land market in NYC:

The sales that will happen are sites that have the old 421-a “Affordable NY” grandfathered in or sites where condo development makes sense. As an example of this, this quarter, we sold 2556 31st Street & 2637 30th Street in Astoria for $10.5million and 2592-2592A 31st Street also in Astoria for above the asking price at $2.58million, both will be developed as condominium projects. (with over 70 offers combined on those two listings alone). We also recently placed 2610-2616 Cropsey Avenue in Brooklyn under hard contract and just sent a contract out for 141-01 32nd Avenue in Flushing Queens: both condominium projects. Both of these specific listings were on the market for less than 45-days with over 20 submitted offers.

The markets that are struggling are where only rental housing makes sense to build. If the politicians are able to come to the table with smart solutions and a new 421-a, we will see these markets thrive, even in a high interest rate environment.

Financial Market Summary:

• The Federal Prime Rate is now at 8.0% up from 7.75% last month. The highest rate since May 2006.
• The Secured Overnight Financing Rate (SOFR) is now at 4.8% up from 4.55% one month ago. However the forward-looking 12-month term SOFR rate is 4.75%, last month it was 5.34% so it is trending downward.
• The United Stated Federal Funds Rate is now at 5% up from 4.75%, with more increases on the horizon this year.
• United States Annual Inflation Rate: The current inflation rate is 6.0%, down from 6.4% last month. The Fed’s stated goal is to steadily raise rates until they are able we achieve a 2% inflation rate.
• The US 1-Year Treasury Rate is now at 4.66%. Last month it was at 4.2%.
• Mortgage Rates: the 30-Year Fixed Rate is now at 6.45% and the 15-Year Fixed Rate is 5.84%. Both down slightly from last month.